On May 22, the People's Bank of China (hereinafter referred to as the "Central Bank") announced that in order to maintain sufficient liquidity in the banking system, it will carry out a 500 billion yuan MLF (medium-term lending facility) operation on May 23 in the form of fixed quantity, interest rate bidding and multi price winning, with a term of one year. Given that the MLF maturity amount this month is 125 billion yuan, MLF will achieve a net investment of 375 billion yuan after this operation. This is also the third consecutive month that the central bank has increased the amount of MLF, with net MLF investment of 63 billion yuan and 500 billion yuan in March and April, respectively. Regarding this month's MLF large net investment, Wang Qing, Chief Macro Analyst of Dongfang Jincheng, told reporters that since April, external environmental fluctuations have intensified, and China has implemented unconventional countercyclical adjustments. On May 7th, the central bank and other departments launched a package of financial policy measures, including interest rate cuts and reserve requirement ratio cuts, to increase financial support for the real economy. After the reserve requirement ratio cut in May, MLF continued to increase significantly, which will not only maintain sufficient liquidity in the banking system, but also further increase the credit lending capacity of banks, better meet the financing needs of enterprises and residents, and increase the availability of credit financing for the real economy. The large-scale increase in MLF in May may also mean that the buyout reverse repurchase will be further reduced and continued this month to meet the structural adjustment of commercial banks' demand for central bank financing tools. ”Wang Qing expects that, considering the implementation of the reserve requirement ratio cut in May, there may be a slight decrease in overall liquidity investment in the middle of this month. In recent years, the central bank has accelerated the market-oriented reform of interest rates. After clarifying the policy interest rate status of the 7-day reverse repo operation rate in July last year, the bidding mode of MLF was adjusted in March this year, changing to fixed quantity, interest rate bidding, and multi price bidding, without a unified bidding rate. The policy attribute of MLF interest rate has been withdrawn, returning to the positioning of liquidity injection tools, and reasonably matched with other tools to maintain sufficient liquidity. The recent report on the implementation of China's monetary policy for the first quarter of 2025 released by the People's Bank of China stated that after the improvement of the MLF bidding mechanism, the announcement of results on the day of operation will be changed to a pre announcement of bidding, which is conducive to participating institutions making early arrangements for short, medium, and long-term liquidity. Winning the bid at multiple price points in price bidding is not only beneficial for institutions to reasonably determine the bidding interest rate according to demand, improve the independent market-oriented pricing ability of financial institutions, but also beneficial for the central bank to dynamically grasp the liquidity surplus and shortage of institutions. At the same time, with the continuous enrichment of the channels for the release of basic currency, the dependence of monetary policy operations on MLF has gradually decreased. (New Society)