The People's Bank of China will conduct a 600 billion yuan Medium-term Lending Facility (MLF) operation on September 25th

   The Medium-term Lending Facility (MLF) has been expanded for seven consecutive months through augmented rollover operations.  

   On September 24, the People's Bank of China (PBC) announced that, to maintain ample liquidity in the banking system, it would conduct a 600-billion-yuan one-year MLF operation on September 25, 2025 (Thursday), using a fixed-quantity, interest-rate bidding mechanism with multiple winning rates.  

   Given the maturity of 300 billion yuan in MLF instruments during the month, the PBC achieved a net liquidity injection of 300 billion yuan via MLF operations in September.  

   In addition, the central bank implemented further net injections of medium- and long-term liquidity through outright reverse repurchase agreements. Specifically, two such operations were conducted on September 5 and September 15, injecting 1 trillion yuan and 600 billion yuan, respectively, resulting in an aggregate net injection of 300 billion yuan.  

   Following the reserve requirement ratio (RRR) cut in May, the PBC has consistently conducted MLF and outright reverse repo operations, maintaining a sustained net injection of medium-term liquidity.  

   According to Wang Qing, Chief Macro Analyst at Orient Jincheng, since the RRR cut released approximately 1 trillion yuan in long-term liquidity in May, medium-term liquidity conditions have remained in a net-injection phase for nearly four months, with the scale of net injections notably expanding over the past two months. This trend can be attributed to three primary factors. First, the current period coincides with a peak in government bond issuance, while regulators continue to encourage financial institutions to strengthen credit extension. The PBC’s ongoing provision of medium-term funding reflects coordinated efforts between monetary and fiscal policies, facilitating smooth government bond issuance and better supporting the credit financing needs of enterprises and households. Second, recent upward pressure on medium- and long-term market interest rates—driven by shifting market expectations amid regulatory efforts to reduce excessive intra-industry competition and bolstered investor sentiment from a strengthening stock market—has led to a tightening of banking system liquidity. Increased liquidity provisioning through instruments such as the MLF helps stabilize market expectations and ensure sufficient liquidity conditions. Third, the sustained net injection of medium-term liquidity signals the PBC’s continued emphasis on quantity-based monetary policy tools, underscoring the accommodative stance of monetary policy aimed at supporting economic growth.