The central bank continues to increase the MLF and has injected over 1 trillion yuan in net funds this year.

As the New Year approaches, the central bank continues to send a clear signal to the market by releasing stable liquidity through the medium-term lending facility. In December, the MLF was increased again, achieving a net injection of medium-term funds while offsetting the pressure from maturing loans, continuing the liquidity control strategy of "maintaining stability while slightly loosening" throughout the year. "In December, 300 billion yuan of MLF matured, with a net injection of 100 billion yuan, marking the tenth consecutive month of increased lending as expected by the market," said Wang Qing, chief macro analyst at Orient Securities. Considering the 200 billion yuan net injection through reverse repos in December, the total net injection of medium-term liquidity in the month reached 300 billion yuan. Looking back at the operation of MLF throughout the year, Wang Qing noted that the net injection of MLF by the central bank in 2025 amounted to 1.161 trillion yuan, with a total net injection of medium-term liquidity reaching 4.961 trillion yuan. This is mainly due to the fact that despite a decrease in the number of reserve requirement cuts by the central bank compared to 2024 and a decrease in net purchases of government bonds from the previous year, market liquidity has remained relatively stable and abundant. "This strongly supports the issuance of government bonds on a larger scale in 2025," Wang Qing believes that after the monetary policy stance shifted from "prudent" to "moderately loose" in 2025, the continuous increase in the use of quantitative monetary policy tools to counter-cyclical adjustments will provide crucial support for achieving the annual economic growth target smoothly.