China Maintains MLF Loan Rate at 2.85% for 1-Year Term

Despite the Russia-Ukraine Crisis and Nationwide COVID-19 Spread, Interest Rates Remain on Hold

[Asia Economy Beijing=Special Correspondent Jo Young-shin] The People's Bank of China, the central bank of China, maintained the Medium-term Lending Facility (MLF) loan interest rate on the 15th.

[Image source=Yonhap News]

The People's Bank of China announced that it would keep the 1-year MLF loan interest rate unchanged at 2.85%.

The MLF is a policy tool used by the People's Bank of China to supply funds to the market and adjust liquidity and interest rates. When the MLF interest rate decreases, it lowers the cost of loans for banks.

Earlier this year, the People's Bank of China lowered the 1-year MLF loan interest rate from 2.95% to 2.85%, a 0.1 percentage point cut.

Some in China had predicted that the Chinese financial authorities might cut the MLF interest rate as a measure to stimulate the economy. This was based on the unexpected variable of Russia's invasion of Ukraine and the adverse factor of the nationwide spread of COVID-19, leading to expectations that Chinese financial authorities would take preemptive action.

Within China, it was expected that the Loan Prime Rate (LPR), which serves as the benchmark interest rate, might be cut as early as March 20. However, with the People's Bank of China deciding to maintain the MLF loan interest rate as before, the likelihood of an LPR rate cut has increased to the second quarter.

This content was produced with the assistance of AI translation services.