MNI BRIEF: PBOC Delays Monthly Operation, Weakens MLF Role
The People’s Bank of China has delayed the monthly operation of its medium-term lending facility, further downplaying its role as a key policy rate.
The PBOC will conduct the operation on Aug 26, while a total of CNY401 billion of one-year MLF will mature this month, according to a statement on the central bank’s website on Thursday,
The Bank typically conducts its MLF exercise on the 15th of each month as long as it is a trading day. This is the second time it has broke with tradition after it unexpectedly operated CNY200 billion MLF on July 25 with a 20 basis point cut of the rate to 2.3%.
MNI reported that the Bank is turning to the 7-day reverse repo rate as its premier policy rate, as it decreases the MLF’s importance and its connection to the Loan Prime Rate. (See MNI: PBOC Repos First Step To Narrower Rates Corridor-Advisors)