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China Raises Medium-Term Lending Rates in Tightening Signal

  • PBOC says MLF operations added 245.5 billion yuan to system
  • Central bank boosted rates on 1-year, 6-month loan facilities
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Why Money Keeps Flowing Out of China

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China’s central bank increased the interest rates on medium-term loans that it uses to manage liquidity, a move analysts say signals its intent to keep a tight rein on leverage in the financial system.

The one year Medium-term Lending Facility rate was raised to 3.1 percent from 3 percent and the six-month rate to 2.95 percent from 2.85 percent, the People’s Bank of China said in a statement Tuesday. The monetary authority said the operations injected 245.5 billion yuan ($36 billion) into the financial system.