Financial Times: MLF interest rate policy interest rate color will fade

On July 15th, Pan Gongsheng, governor of the People's Bank of China, said at the Lujiazui Forum on June 19th, "In the future, we can consider explicitly using a short-term operating interest rate of the central bank as the main policy interest rate. At present, the 7-day reverse repurchase operation interest rate has basically assumed this function. The interest rate of other term monetary policy tools can dilute the color of the policy interest rate." This means that while strengthening the main policy interest rate status of the 7-day reverse repurchase interest rate, the policy interest rate color of the MLF operating rate will be diluted < b >. Looking back at the history of MLF, it was originally established as a tool for base money delivery. As the parties regarded MLF as a wind vane of LPR in the later stage, the attention paid to it increased significantly. In recent years, the short-term market interest rate revolves around the policy interest rate, and the policy interest rate has a good guiding effect, while the MLF interest rate, which is the medium-term policy interest rate, often deviates from the market interest rate of the same term. In addition, from the perspective of correlation with LPR, the two are more out of sync.