Lates News

Yesterday, the central bank announced a 600 billion yuan MLF operation. Wen Bin, chief economist of Minsheng Bank, stated that in the next stage, the funding pressure will face certain tightening pressure due to factors such as the peak tax period, accelerated issuance of government bonds, and bank dividends. The substantial net injection of MLF will help to release liquidity smoothly and send positive signals. In April, the substantial oversupply of MLF fully met the demand of the banking system, and may have a certain downward impact on its pricing, helping to improve the cost of bank liabilities and making the MLF interest rate closer to market rates, aligning with the prices of 1-year interbank CDs, and further weakening its policy attributes to accelerate the marketization of interest rates. However, interest rate cuts still face multiple constraints domestically and internationally. Therefore, given the current relatively low market interest rates and the need to continue observing domestic and international situations, the use of policies such as reserve requirement reductions and interest rate cuts may still be relatively cautious. In this context, the central bank's increased efforts to inject medium-term liquidity into the market through MLF can meet liquidity needs, send stable signals, and reserve more policy space for the future.