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China’s central bank on Tuesday cut a key policy rate, a move that may guide down benchmark lending rates as the world’s second-largest economy showed more signs of cooling.
The People’s Bank of China injected 2 billion yuan of liquidity via the seven-day reverse repurchase agreement at an interest rate of 1.9%.
The cut may guide down the nation’s benchmark loan prime rate, which will be released next Tuesday.
The move came after PBOC Gov. Yi Gang said last week that the central bank will step up “counter-cyclical” adjustments and further lower financing costs for the economy. Recent economic data showed China’s pandemic recovery has lost steam without government stimulus after a strong rebound earlier this year.
Recent deposit rate cuts by Chinese commercial banks has also made a benchmark lending rate cut more likely this month, as cutting deposit rates could lead to a smaller squeeze on lenders’ interest margins, economists say.
Write to Singapore Editors at singaporeeditors@dowjones.com
Corrections & Amplifications
This story was corrected 0216 GMT. The original incorrectly said the People’s Bank of China injected liquidity via the seven-day repurchase agreement.
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