KSTR - PBOC Surprises Markets With An Off-Schedule 20bp Cut To The MLF
2024-07-25 04:25:00 ET
Summary
- After keeping it unchanged earlier this month, the PBOC surprised markets by suddenly cutting the medium-term lending facility (MLF) by 20bp, which brought the MLF down from 2.5% to 2.3%.
- The timing and scale of the cut were why this decision came as a surprise to markets.
- Collateral reductions for MLF signal the PBOC's intention to cool the bond market.
By Lynn Song
What's behind the PBOC's sudden off-schedule MLF cut?
It's been a busy week for the PBOC. After cutting the 7-day reverse repo rate on Monday and seeing banks lower their loan prime rates and deposit rates, the PBOC continued its easing with a 20bp cut to the 1-year medium-term lending facility (MLF) rate, bringing the MLF down from 2.5% to 2.3%....
PBOC Surprises Markets With An Off-Schedule 20bp Cut To The MLF