Market experts: Gradually dilute the policy color of MLF interest rates, and price-based regulation will play a more important role in the implementation of monetary policy

On June 19th, Governor of the Central Bank Pan Gongsheng stated at the 2024 Lujiazui Forum that further improvement of the market-oriented interest rate regulation mechanism is needed. Pan Gongsheng suggested that in the future, it may be considered to clearly define a short-term operating rate of the central bank as the main policy rate. Currently, the 7-day reverse repurchase operating rate has basically assumed this function. The rates of other monetary policy tools with different terms can dilute the color of policy rates and gradually streamline the transmission relationship from short to long term. Market experts believe that this may mean that short-term rates will become the main policy rate, thereby diluting the policy rate color of the medium-term lending facility (MLF).