After cutting the seven-day reverse repo rate by 10 basis points at 9.20am, the Standing Lending Facility (SLF) rate was also cut by 10 basis points at 8.00pm the same day. On June 15, the People’s Bank of China (PBOC) conducted a one-year MLF operation of 237 billion yuan, with an interest rate of 2.65%, down from 2.75% previously . 200 billion yuan of MLF expires today.
On June 15, 2023, the PBOC announced that in order to maintain reasonable and sufficient liquidity in the banking system, it conducted a medium-term loan (MLF) operation of 237 billion yuan and a reverse repurchase of 2 billion yuan yuan through open market operations. The MLF rate was 2.65%, down 10 basis points.
Industry experts believe that the coordinated reduction in policy interest rates has sent a clear signal of the objective to establish growth, which reflects counter-cyclical adjustments in monetary policy and aims to further strengthen support for the ‘real economy.
Ming Ming, chief economist at CITIC Securities, said the MLF interest rate cut may promote a faster decline in the incremental borrowing rate (IBR) and at the same time send a stronger signal of stabilization of the growth, thus providing strong support for economic recovery. .
Analysts previously noted that the interest rate system could fall in the future. The MLF interest rate was cut on 15 June and the LPR is expected to be cut on 20 June.
In addition, according to financial data released by the PBOC on June 13, the year-on-year growth rates of credit, M2 and informal finance fell overall. The growth rates of M2 and informal financing were already lower than in December last year.
New yuan loans in May were 1.36 trillion yuan, down 541.8 billion yuan year-on-year. New informal financing in May was 1.56 trillion yuan, down 1.31 trillion yuan year-on-year. The annual growth rate of informal finance fell from 10.0% in April to 9.5% in May, and the growth rate of M2 fell from 12.4% in April to 11.6% in May. The growth rate of the credit balance is only 0.3 percentage points higher than in December last year.
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