Economic calendar in Asia 16 October 2023 – People's Bank of China MLF day

<p>The People's Bank of China will be setting its Medium-term Lending Facility (MLF) rate today. Watch for this just after 0115 GMT (2115 US Eastern time). </p><p>The Bank is expected to keep borrowing costs via the MLF unchanged this month at 2.5%. </p><ul><li>500 billion yuan of medium-term policy loans will roll today and this amount, likely more, is expected to be added via a new MLF. </li></ul><p>What is the MLF?</p><p>The PBOC's MLF rate is a benchmark interest rate that banks in China can use to borrow funds from the People's Bank of China for a period of 6 months to 1 year, as medium-term liquidity to commercial banks.
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The rate is typically announced on the 15th of each month. That was Sunday so we'll get it today.</li><li>
The interest rate on the MLF loans is typically higher than the benchmark lending rate (more on these below), which encourages banks to use the facility only when they face a shortage of funds.
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MLF loans are secured by collateral, which can be a wide range of assets including bonds, stocks, and other financial instruments. The collateral ensures that the PBOC can recover the funds if the borrower defaults on the loan.
</li></ul><p>The MLF rate sets the scene for the monthly Loan Prime Rate (LPR) setting later this week on the 20th.
Current LPR rates are:
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3.45% for the one year
</li><li>4.20% for the five year
</li></ul><p>The MLF has already been cut twice since June. In August it was cut from 2.65% to 2.5%. At the same time, the 7-day reverse repo rate was cut, to 1.8% from the prior 1.9%. The cut to the MLF paved the way for an LPR cut in August, the 1-year was trimmed to 3.45% from 3.55% while the 5-year remained unchanged.</p><ul><li>This snapshot from the ForexLive economic data calendar, <a href="https://www.forexlive.com/EconomicCalendar" target="_blank" title="Click here!">access it here</a>.</li><li>The times in the left-most column are GMT.</li><li>The numbers in the right-most column are the 'prior' (previous month/quarter as the case may be) result. The number in the column next to that, where there is a number, is the consensus median expected.</li></ul>

This article was written by Eamonn Sheridan at www.forexlive.com.