The central bank will conduct 600 billion yuan in MLF operations with a one-year maturity.

    The People's Bank of China (hereinafter referred to as “the central bank”) will conduct 600 billion yuan in Medium-term Lending Facility (MLF) operations.

    According to the central bank's website, to maintain ample liquidity in the banking system, the People's Bank of China will conduct 600 billion yuan in MLF operations on Monday, August 25, 2025, using a fixed amount, fixed interest rate, and multiple-price bidding method. The term of the operation is one year.

    Considering that 300 billion yuan of MLF maturing this month, this means a net injection of 300 billion yuan in August, marking the sixth consecutive month of increased MLF operations, in line with market expectations.

    The Medium-term Lending Facility (MLF) is a monetary policy tool used by the central bank to provide medium-term base money. It targets commercial banks and policy banks that meet macroprudential management requirements and can be conducted through bidding. The MLF is extended through a collateralized lending mechanism, with financial institutions providing high-quality bonds such as government bonds, central bank bills, policy financial bonds, and high-grade corporate bonds as eligible collateral. By adjusting the cost of medium-term financing for financial institutions, the MLF rate influences their balance sheets and market expectations, guiding them to provide low-cost funds to the real economy and helping reduce overall social financing costs.