FX.co ★ PBoC Injects CNY 600 Billion of MLF into Banking System

On September 25, the People's Bank of China (PBoC) infused CNY 600 billion into financial institutions via its one-year Medium-Term Lending Facility (MLF). This initiative aims to ensure adequate liquidity within the banking sector. With CNY 300 billion in MLF funds due to mature this month, this resulted in a net liquidity infusion of CNY 300 billion, marking the seventh consecutive month of net MLF injections. The central bank utilized a fixed-quantity, interest-rate bidding, and multiple-price bidding mechanism for this operation. Implemented in March, this method means that the PBoC no longer discloses a predetermined interest rate for MLF activities. The net injection for this month matched that of August. Earlier in the week, the central bank also carried out a CNY 300 billion operation involving 14-day reverse repos, which was the first since the institution revised the bidding rules for this tool last week.