China Introduces More Rate Cuts as Country Moves to Boost Economy

Source: Bloomberg

The People’s Bank of China has decided to slash the loan costs of its short-term policy loan a week after it reduced a key interest rate. MCHI is up 0.15% premarket.

• The PBOC trimmed the overnight standing lending rate by 10 basis points to 2.95% based on a central bank statement dated January 17.
• Both the seven-day and one-month rates were also cut down by 10 basis points each, effective January 17.
• The standing lending facility rate is less popular as only lenders can apply for such funds, with the operations only disclosed at the start of every month.
• The rates were introduced in 2013, moving in tandem with key policy rates. The SLF, however, is considered at the upper bound of China’s interest rate corridor.
• The PBOC earlier lowered its one-year policy loan rate by 10 basis points to 2.85%, the first rate cut in nine months since April 2020.