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PBOC MLF balance hit new record high, RRR cut more about structural rebalancing

The People's Bank of China announced that it will lower the reserve requirement ratio (RRR) by 100bp for most banks, and it will release about 1.2 trillion yuan liquidity, including 450 billion to be used to replace Mid-Term Lending Facility (MLF) maturing on Oct. 15 while releasing 750 billion yuan to offset the liquidity-drain from tax submission in second half of October, according to the central bank.
The move comes after the central bank's MLF outstanding hit a new record high. By the end of September, the central banks' MLF balance had surged to 5.38 trillion yuan, the highest on record, according to data released by the central bank.

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