Chinese Central Bank Injects 200B Yuan via MLF on 15 June

The People’s Bank of China (PBOC) has injected 200 billion yuan (approx. USD$28.19 billion) via medium-term lending facilities (MLF) on 15 June 2020.

The term for the MLF was one-year, while the rate remained the same as the previous operation at 2.95%.

According to PBOC the purpose of the injection is maintain “rationally ample” liquidity in the Chinese banking said.

In June 740 bil­lion MLF are sched­uled to ma­ture, for the high­est vol­ume on record.

PBOC previously said on 8 June that it would ex­tend MLF ma­tur­ing around 15 June, with the spe­cific amount to be de­ter­mined based on mar­ket con­di­tions. 

Bank of China re­searcher Li Pei­jia (李佩珈) said that look­ing at fis­cal de­posits, ma­tur­ing MLF and funds out­stand­ing for for­eign ex­change, June is likely to see an ex­pand­ing short­fall in funds, and needed an ex­pan­sion in mon­e­tary pol­icy tool sup­port mea­sures. 

En­ter­prises in China make their tax pay­ments in June, which will lead to an in­crease in fis­cal de­posits, lead­ing to a re­duc­tion in the money sup­ply. 

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