On December 16, the people's Bank of China launched a medium-term lending facility (MLF) operation of 300 billion yuan, 14 billion yuan more than the amount due on that day. The operation period of the MLF is one year, and the interest rate is maintained at 3.25%. On that day, no reverse repurchase operation will be carried out.
After entering December, the liquidity environment continued to be good, and the money market fund interest rate remained basically stable. In addition, the seasonality of fiscal expenditure has increased, and the central bank has suspended intervention in short-term liquidity regulation in the past week. Previously, on December 6, the central bank launched a one-year MLF operation of 300 billion yuan, 112.5 billion yuan more than the current maturity. Since October, the central bank has carried out five MLF operations and invested 523 billion yuan in medium and long-term liquidity, replacing reverse repurchase as the main channel of liquidity investment.
Mingming, deputy director of CITIC Securities Research Institute, pointed out that the characteristics of "short-term and long-term" operation in the open market were significant. The background of this RMB 300 billion MLF operation hedging is that, on the one hand, when the tax payment time is right, we still insist on increasing the medium and long-term liquidity investment to compact the basis of reasonable and abundant liquidity; on the other hand, we need to grasp the liquidity investment strength when dr007 has been kept below 2.50% of the 7-day reverse repo operation interest rate since December.
As of 10:15 a.m. on the 16th, dr001 rose 30.42bp to 2.43% compared with the previous trading day, and dr007 rose 11.50bp to 2.53% compared with the previous trading day, with reasonable and abundant inter-bank liquidity.
Wen bin, chief researcher of China Minsheng Bank, said that the main purpose of the over volume continuation is to ensure that the financial system's cross-year liquidity remains reasonable and abundant. Market participants expect that in order to avoid structural tensions at the end of the year, the central bank will carry out pre adjustment and fine-tuning operations in the next two weeks.
"In the cross year process, the market demand for buyback financing will increase seasonally. Behind the expansion of repurchase financing demand is the aggravation of structural capital shortage. At this time, capital availability is far more important than capital cost. " Zhang Xu, a fixed income analyst at Everbright Securities, said that incremental continuous MLF can improve the cross year capital situation of the financial system from two aspects of supply and demand: on the one hand, it increases the capital supply capacity and willingness of the financing institutions; on the other hand, after the financing institutions obtain MLF funds, their repurchase financing demand will be correspondingly reduced.
It is worth noting that the 1-year MLF rate remains unchanged at 3.25%. Wen bin pointed out that on the one hand, it is due to the suspension of interest rate reduction by the Federal Reserve, on the other hand, China is still facing structural inflation pressure at present, and the stability of policy interest rate helps stabilize inflation expectations. Mingming pointed out that in December, the two MLF operations maintained the same operating interest rate of 3.25%, the two operations maintained the characteristics of over continuous production and constant price, and the monetary policy was mainly stable, with fixed force, scientific, stable and counter cyclical adjustment. However, cost reduction is still the main direction of monetary policy. In the future, we may need to pay more attention to the strength, rhythm and structural operation of monetary policy.
