PBoC to Conduct 600 Billion Yuan MLF Operation on May 25, Net Injection This Month

China's central bank continues to use Medium-term Lending Facility (MLF) to inject medium- and long-term liquidity in May.

On May 22, the People's Bank of China (PBoC) announced its May MLF tender notice, stating that on May 25, 2026, it would conduct a 600 billion yuan MLF operation with a one-year term, using a fixed-volume, rate-bidding, multiple-rate award method, in order to maintain ample liquidity in the banking system.

Since 500 billion yuan in MLF matures this month, the net injection amounts to 100 billion yuan. In April, the MLF saw a net withdrawal of 200 billion yuan, ending 13 consecutive months of net injections.

Prior to this, the PBoC had conducted net withdrawals of medium-term liquidity through buy-out reverse repo operations in May, with a combined net withdrawal of 1 trillion yuan across two tenors.

Everbright Securities noted in a research report that over the past period, the PBoC had been consistently draining "excess" liquidity from the banking system via buy-out reverse repos and MLF, with the pace of withdrawal gradually increasing. In March and April, the central bank withdrew 250 billion yuan and 600 billion yuan respectively using these tools, and withdrew 1 trillion yuan in the first half of May. The firm judges that banking system liquidity has now fallen from extremely ample levels back toward this threshold.