China-Singapore Jingwei Client, November 17th, the central bank’s website announced on the 17th that in order to maintain a reasonable and sufficient liquidity in the banking system, the People’s Bank of China launched a 50 billion 7-day reverse repurchase operation on November 17, 2020 through an interest rate bidding method. The winning bid rate was 2.20%, unchanged from the previous time.

　　Source: Central Bank website

　　Wind data shows that this week the central bank's open market has a total of 550 billion yuan of reverse repurchase, and 200 billion yuan of medium-term loan facilities (MLF) expired.

Among them, 200 billion MLF expires on Monday, and 120 billion, 150 billion, 120 billion and 160 billion reverse repurchase expires from Tuesday to Friday.

　　On the 16th, the central bank renewed the MLF due this month as scheduled, with an operating volume of 800 billion yuan and an operating interest rate of 2.95%.

This is the fourth consecutive month that the central bank has made heavy volume sequel to MLF.

　　Wang Qing, chief macro analyst at Oriental Jincheng, believes that the MLF has continued to perform excessively for 4 consecutive months, which means that the central bank intends to regulate the upward momentum of the medium-term market interest rate represented by the inter-bank certificate of deposit interest rate, so as to avoid short-term liquidity tension.

This will help stabilize market expectations. It will also help banks continue to lower their actual loan interest rates before the end of the year and reduce the financing costs of the real economy.

　　MLF is one of the central bank's open market operations, and is a monetary policy tool that provides medium-term base currency to commercial banks and policy banks.

Unlike the more common reverse repurchase operations in open market operations, the reverse repurchase period is usually 7 days or 14 days, which is short-term liquidity; while the MLF period is usually one year, and it is medium-term liquidity.

　　Judging from recent market interest rates, the Shanghai Interbank Offered Rate (Shibor) has shown an overall upward trend.

From November 5 to 13, the overnight interest rate rose from 1.377% to 2.523%, and the one-year interest rate rose from 3.196% to 3.205%.

On November 16, the overnight varieties reported 2.252% down at 27.1bp, 9.4bp down at 2.339% in the 7-day period, 1.8bp up at 2.86% in the 14-day period, and 2.682% up at 0.3bp in the 1-month period.

　　Wen Bin, chief researcher of Minsheng Bank, said that as the end of the year is approaching, fiscal expenditures will increase, which will help improve market liquidity; from the central bank's perspective, it will use the policy combination of MLF+ reverse repurchase more to maintain market liquidity and expected stability.

　　What is the trend of the loan market quote rate (LPR) in November? Wang Qing said that considering the MLF operating interest rate is the reference basis for the 1-year LPR quotation, and the two have been adjusted simultaneously since September last year, it is expected that the 1-year LPR quotation announced on November 20 will likely remain unchanged. . (Zhongxin Jingwei APP)