China's central bank on Tuesday cut a set of policy rates, signaling a that the country's benchmark lending rates will be trimmed later this month.
The People's Bank of China injected 401 billion yuan ($55.24 billion) of liquidity via the one-year medium-term lending facility at an interest rate of 2.50%, down from the previous 2.65%. It also provided CNY204 billion of funds through seven-day reverse repurchase agreements at an interest rate of 1.90%, down from 1.80% previously.
The PBOC also cut rates on its standing lending facility, or SLF, by 10 basis points, effective immediately, with rates for overnight, 7 days and one month lowered to 2.65%, 2.80% and 3.15%, respectively. Financial institutions can obtain short-term liquidity through the SLF program from the central bank, using qualified bonds and other assets as collateral.
The PBOC cut all the rates by 10 basis points in June and later guided the benchmark loan rates lower.
The cut on key policy rates came as Beijing grapples with a sputtering economy, prompting calls for major policy support to kickstart growth. Official data released Tuesday showed spending growth by consumers and businesses slowed last month, while factory output grew far less than expected.
Economists warn that any interest-rate cuts would widen the yield gap with the U.S., further pressuring the yuan.
A senior official from China's central bank said earlier that monetary-policy tools--including reserve requirement ratio cuts, open-market operations and medium-term lending facilities--would be used flexibly to keep liquidity ample in the country's banking system.
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(END) Dow Jones Newswires
08-15-23 0348ET
