The People's Bank of China skipped opne market operations (no reverse repos today) earlier
But the Bank has injected funds via the Medium term Lending Facility (MLF)
- injects 156bn yuan
- Rate 3.3%
- 1 year injection
Note, there is 156bn yuan of maturing MLF today, so this effectively a roll over of these
Note also, the Bank injected 80.1bn yuan through Pledged Supplementary Lending (PSL)
---
A quick guide to the alphabet soup of PBOC money market operations:
Open-Market Operations (OMO)
- Most frequently used (I report on these each day M-F)
- Mainly short-term loans to banks
- Depending on the size of the funds added and the amounts that mature, the operations can result in either a net injection or withdrawal of cash from the financial system
- Range from seven days to several years, but it's the 7-, 14- & 28-day contracts that are most commonly used
- Have an immediate effect on the money market, pushing rates one way or the other
- Operations are carried out using what are known as reverse-repurchase agreements, where banks use bonds as collateral to borrow funds from the PBOC and agree to return the money at a future date. The central bank also uses repurchase agreements, which drain cash, as well as bill sales in its OMOs.
Medium-term Lending Facility (MLF)
- three, six and 12 months loans
- loans to banks
Pledged Supplementary Lending (PSL)
- Used to fund China's three policy banks (tasked with financing government projects) for investment
- "Policy banks": Agriculture Development Bank of China, China Development Bank Corp. and the Export-Import Bank of China
