The central bank conducts a net injection of 300 billion yuan through 600 billion yuan MLF, continuing to increase the MLF for 12 consecutive months

Reporter Liu Qi

On February 24, the People’s Bank of China released the February 2026 Medium-term Lending Facility (MLF) auction announcement. The announcement states that to maintain ample liquidity in the banking system, on February 25, 2026, the People’s Bank of China will conduct a 600 billion yuan MLF operation with fixed amount, fixed rate bidding, and multiple price points, with a one-year maturity.

Given that this month’s MLF maturity amount is 300 billion yuan, after conducting the 600 billion yuan MLF operation, the People’s Bank of China will achieve a net injection of 300 billion yuan. This marks the 12th consecutive month of increased MLF operations. Additionally, the People’s Bank of China also conducted net injections of 600 billion yuan through outright reverse repos this month, meaning that the net liquidity injection for February totals 900 billion yuan. Although this is slightly less than January’s 1 trillion yuan, it remains at a high level.

Ming Ming, Chief Economist at CITIC Securities, told Securities Daily that after the Spring Festival holiday, during the liquidity recovery phase, the People’s Bank of China has provided ample liquidity at the long end, reflecting a loose stance aimed at maintaining sufficient liquidity.

“By increasing and continuing the large-scale net liquidity injection through MLF in February, the People’s Bank of China can effectively respond to potential liquidity tightening and guide funds to remain relatively stable and abundant. This not only supports government bond issuance and encourages banks to maintain steady credit support but also signals a continued increase in quantity-based monetary policy tools, demonstrating the monetary policy’s supportive stance,” said Wang Qing, Chief Macro Analyst at Dongxing Securities, to Securities Daily. The significant net liquidity injections in January and February also suggest a low likelihood of reserve requirement ratio (RRR) cuts in the near term.

Regarding future monetary policy, the People’s Bank of China recently released the “Q4 2025 China Monetary Policy Implementation Report” (hereinafter referred to as the “Report”), which mentions the flexible and efficient use of various policy tools such as RRR cuts and interest rate reductions to maintain ample liquidity and relatively relaxed social financing conditions, guiding the reasonable growth of total financial assets and balanced credit deployment, aligning social financing scale and money supply growth with economic growth and inflation expectations.

Ming Ming believes that the continued emphasis on liquidity easing in the “Report” suggests that the People’s Bank of China will likely maintain net injections through regular monetary policy tools such as MLF and outright reverse repos in the future. During periods of significant government bond supply pressure, RRR cuts may also be implemented.

(Edited by: Wen Jing)