China central bank unexpectedly cuts rates to support economy

  • China’s central bank unexpectedly cut key policy rates for the second time in three months on Tuesday, in a fresh sign that the authorities are ramping up monetary easing efforts to boost a sputtering economic recovery.
  • Analysts said the move opened the door to a potential cut in China’s lending benchmark loan prime rate (LPR) next week.
  • The People’s Bank of China (PBOC) said it lowered the rate on 401 billion yuan ($55.25 billion) worth of one-year, medium-term lending facility (MLF) loans to some financial institutions by 15 basis points to 2.50% from 2.65% previously.
  • The central bank also injected 204 billion yuan through seven-day reverse repos while cutting borrowing costs by 10 basis points to 1.80% from 1.90% previously, it said in an online statement.

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