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PBOC 1 year MLF rate cut to 2.65% (prior 2.75%), as widely expected

Eamonn Sheridan
Eamonn Sheridan
Thursday, 15/06/2023 | 01:20 GMT-0
15/06/2023 | 01:20 GMT-0

People's Bank of China Medium-term Lending Facility (MLF)

People's Bank of China inject 237bn yuan via a one-year MLF at 2.65%

  • 200bn yuan of MLF are maturing today
  • thus net MLF injection is 37bn yuan


The MLF rate is a benchmark interest rate that banks in China can use to borrow funds from the People's Bank of China for a period of 6 months to 1 year, medium-term liquidity to commercial banks.

The rate is typically announced on the 15th of each month.

The interest rate on the MLF loans is typically higher than the benchmark lending rate (more on these below), which encourages banks to use the facility only when they face a shortage of funds.

The MLF rate sets the scene for the monthly Loan Prime Rate (LPR) setting on the 20th.

Current LPR rates:

  • 3.65% for the one year
  • 4.30% for the five year

MLF loans are secured by collateral, which can be a wide range of assets including bonds, stocks, and other financial instruments. The collateral ensures that the PBOC can recover the funds if the borrower defaults on the loan.

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