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MNI BRIEF: Net MLF Drain Not Sign Of Tight Liquidity - Paper

MNI (Singapore)
(MNI)Beijing

The People’s Bank of China executed the medium-term lending facility in line with market demand and has no intention to reduce its scale, said the Financial News, a newspaper under the central bank, citing experts.

The PBOC drained a net CNY94 billion via the MLF on Friday , the first net drain in 15 months, which concerned investors that the central bank may tighten liquidity to curb idle funds circling inside the financial system.

The paper stressed the PBOC had not changed its stance of keeping liquidity ample at a reasonable level. “There are significant reductions in demand for the MLF from some financial institutions, compared to their maturing volume, resulting in the total MLF operation being less than the maturing volume,” experts said, noting the current market liquidity is generally loose, considering previous reserve requirement ratio reductions and cash increase after the Spring Festival. (See MNI INTERVIEW: PBOC To Cut Rates To Boost Credit - Zhang Bin)

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