The PBOC keeps the MLF rate unchanged

The People’s Bank of China (PBOC) today maintained its key interest rate. This move could allow China to maintain its key interest rate (LPR) next week after the rate was cut in August.

The PBOC kept the 1-year medium-term loan (MLF) interest rate, China’s policy rate, at 2.75%.

Meanwhile, the PBOC injected liquidity of 400 billion yuan ($574.5 billion) through its financial instruments and 2 billion yuan through reverse repurchase agreements.

On August 15, the PBOC cut the MLF rate by 0.10% to 2.75%, which led to the PBOC cutting the one-year LPR rate by 0.05% to 3.65% and reducing the LPR rate. The five-year bond rate was cut by 0.15% to 4.30% on August 22 to help the economy recover after the domestic economy was severely affected by the COVID-19 epidemic and the collapse of the housing market.

Markets assume that the PBOC’s unchanged MLF rate today could be a sign that the PBOC will also maintain the LPR rate.

The PBOC is scheduled to announce the 1-year and 5-year LPR rates on Sept. 20.

Leave a Reply

Change Language
%d bloggers like this: