This month's LPR is also expected to be lowered, and the central bank will cut interest rates again! Both MLF and reverse repurchase rates have been lowered. MLF | Bank | Reverse Repurchase
Today, the People's Bank of China announced that in order to hedge against factors such as peak tax periods and maintain reasonable and sufficient liquidity in the banking system, the People's Bank of China launched a 204 billion yuan open market reverse repurchase operation and a 401 billion yuan medium-term lending convenience operation on August 15, fully meeting the needs of financial institutions. The one-year MLF winning bid rate was lowered from 2.65% to 2.50%, and the 7-day reverse repurchase rate was lowered from 1.90% to 1.80%. The MLF operating rate and the open market reverse repurchase rate have decreased by 15 and 10 basis points respectively.
This is the second time this year that the central bank has lowered interest rates. In June this year, the central bank lowered the one-year MLF rate and the 7-day reverse repurchase operation rate by 10 basis points each.
The loan market quoted interest rate is generally formed by the MLF rate and the bank's markup. When the central bank reduces the costs of reverse repo and MLF, commercial banks have the motivation to lower LPR quotes, thereby driving down loan interest rates. After the MLF adjustment, the LPR is also expected to decrease this month.
The central bank has exceeded its MLF limit for 9 consecutive months. In December of last year, January, February, March, April, May, June, July, and August of this year, operations were increased by 150 billion yuan, 79 billion yuan, 1990 billion yuan, 281 billion yuan, 20 billion yuan, 25 billion yuan, 37 billion yuan, 3 billion yuan, and 1 billion yuan, respectively.