PBOC Pauses Monetary Easing... Six Major State-Owned Banks Cut Deposit Rates

The People's Bank of China Keeps 1-Year MLF Rate Steady at 2.75%

Chinese President Xi Jinping (Photo by Yonhap News)

[Asia Economy Reporter Geum Bo-ryeong] As the People's Bank of China enters a 'pause' in its monetary easing policy, it has decided to provide large-scale loan support to channel funds into corporate investment.

According to major foreign media on the 15th, the People's Bank of China, the central bank, announced that it will keep the one-year Medium-term Lending Facility (MLF) rate at 2.75%, the same as before.

The People's Bank of China stated that although 600 billion yuan (approximately 120 trillion KRW) worth of one-year MLF loans matured on that day, it extended the maturity of 400 billion yuan (about 80 trillion KRW) of those loans, thereby freezing the interest rate.

Previously, the People's Bank of China lowered the MLF rate by 0.1 percentage points each in January and mid-last month.

The MLF loan system is a mechanism where the central bank lends funds to commercial banks. The People's Bank of China adjusts the total market liquidity by increasing or decreasing the loan amount on the MLF maturity date. Additionally, by adjusting the loan interest rate, it directly influences the Loan Prime Rate (LPR), which is effectively the benchmark interest rate announced monthly on the 20th.

Meanwhile, China's six major state-owned banks have lowered personal deposit interest rates. According to information on their mobile applications, the Industrial and Commercial Bank of China reduced the 3-year deposit interest rate by 0.15 percentage points starting from that day. The 1-year and 5-year deposit rates were lowered by 0.1 percentage points each.

In addition, the China Construction Bank, Bank of Communications, Bank of China, and Agricultural Bank of China also lowered deposit interest rates starting from that day.

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