The People's Bank of China website reported on November 24 that to maintain sufficient liquidity in the banking system, on November 25, 2025, the People's Bank of China will conduct a 100 billion yuan MLF operation with a term of one year, using a fixed amount, interest rate bidding, and multiple price winning bid method.
The Medium-term Lending Facility (MLF) is a monetary policy tool used by the central bank to provide medium-term base money. It is aimed at commercial banks and policy banks that meet macroprudential management requirements, and can be conducted through bidding. The Medium-term Lending Facility is issued through a pledge method, where financial institutions provide high-quality bonds such as government bonds, central bank bills, policy financial bonds, and high-grade credit bonds as eligible collateral.
The interest rate of the Medium-term Lending Facility plays the role of a medium-term policy rate. By adjusting the cost of medium-term financing for financial institutions, it affects their balance sheets and market expectations, guiding them to provide low-cost funds to real economy sectors aligned with national policy directions, thus promoting the reduction of social financing costs.
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