PBoC Floods Market With $74bn MLF,

Reuters: China central bank injects net 203.5 billion yuan with hefty one-year MLF rollover

Analysts believe the People’s Bank of China (PBOC) may be adjusting the way it conducts its various liquidity operations as financing conditions change, with Wednesday’s move possibly pushing back the timing of another expected cut in banks’ reserve requirement ratios (RRR).

Markets have generally expected another RRR cut in the second half after a surprise reduction in April, with some speculation that it could come as early as June or July.

The net injection was about 43 percent of the total. The PBoC will have to escalate MLF moving forward as maturing repo agreements surge. While July and September totals are lower, this week's 259.5 billion yuan will be exceeded by August's 336.5 billion and 1328.5 billion spread across the fourth quarter.