On December 15, the central bank launched a 500 billion yuan medium-term lending facility (MLF), with an operating interest rate of 2.95%, the same as that in November, maintaining this level for 21 consecutive months. At the same time, the people's Bank of China lowered the deposit reserve ratio of financial institutions by 0.5 percentage points and released about 1.2 trillion yuan of long-term funds. The maturity of MLF this month is 950 billion yuan, and some of the funds released by the RRR reduction will be used by financial institutions to return the expired MLF, and some will be used by financial institutions to supplement long-term funds to better meet the needs of market players. After hedging the maturing MLF, the new long-term capital is 750 billion yuan. "On the same day, the central bank also continued to carry out a 7-day reverse repurchase operation of 10 billion yuan, realizing the combination of long, medium and short term funds. This not only meets the cross-year liquidity demand, but also optimizes the capital structure of the banking system, reflecting that the central bank uses a combination of various monetary policy tools to maintain reasonable and abundant liquidity." Wen bin, chief researcher of China Minsheng Bank, said. Wang Qing, chief Macro Analyst of Dongfang Jincheng, said that banks need to provide qualified collateral (such as treasury bonds) to finance the central bank through MLF. After reducing the reserve requirement and replacing MLF, it can reduce the pressure on banks to occupy assets due to large MLF pledge and improve liquidity. It is worth noting that the bid winning interest rate of this MLF is 2.95% respectively, and the policy interest rate remains unchanged for several consecutive months. Wen Bin said that in the second half of this year, we will comprehensively reduce the reserve requirement twice, release long-term funds and reduce the capital cost of financial institutions. In the next stage, we will continue to release the potential of LPR reform and further reduce the financing cost of the real economy. "There is little possibility of policy interest rate reduction in the short term, but the reduction of MLF interest rate in the first half of next year will be one of the important alternative tools for the implementation of counter cyclical regulation of monetary policy. Whether MLF interest rate can be reduced in the future will mainly depend on the economic growth in the first half of next year, and the operation situation of the real estate market will also be an important observation point." Wang Qing said. (outlook new era)