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China’s central bank on Tuesday cut two key policy rates, signaling that the country’s benchmark lending rates will fall 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 had cut both rates by 10 basis points in June, which later guided the benchmark loan rates lower.
Tuesday’s moves come as Beijing grapples with a sputtering economy, prompting calls for major policy support to kickstart growth.
Economists warn that any interest-rate cuts would widen the yield gap with the U.S., further pressuring 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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