FX.co ★ PBoC Injects CNY 500 Billion into Banking System

On May 23rd, the People’s Bank of China (PBoC) infused CNY 500 billion into various financial institutions using a one-year medium-term lending facility (MLF). This move aimed to ensure sufficient liquidity within the nation's banking sector. The central bank indicated that the MLF operation would utilize a fixed-quantity, interest-rate bidding, and multiple-price bidding approach. Notably, the net MLF injection for this month has reduced from the CNY 600 billion recorded in the previous month. Since March, the PBoC has implemented a multiple-price bidding strategy for MLF operations, meaning a fixed interest rate for the facility is no longer disclosed. Although the MLF rate was previously China's main policy interest rate, the bank has recently pivoted to using a shorter-term monetary policy tool to guide market rates more effectively.