The People’s Bank of China sets the medium-term lending facility rate on the 15th of each month.
The rate is currently 2.3%, after the People’s Bank of China made a surprise interest rate cut on the 25th of last month!
There is a widespread expectation that there will be no change in price today.
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What is MLF?
The People’s Bank of China Medium-Term Mortgage Loan Rate is a reference interest rate that banks in China can use to borrow money from the People’s Bank of China for a period of 6 months to 1 year, as medium-term liquidity for commercial banks.
- The price is usually announced on the 15th of each month.
- The interest rate on MLF loans is usually higher than the standard lending rate (more on this below), which encourages banks to use the facility only when they are short of funds.
- 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 People’s Bank of China will be able to recover the money if the borrower defaults on the loan.
The MLF rate sets the scene for the monthly loan prime rate (LPR), which is scheduled to be set on the 20th of the month.
- 1 year loan Base interest rate 3.35%
- Base interest rate on 5 year loan 3.85%
The bank cut key interest rates last month:
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