Economic Buzz: China Cuts Rates On Policy Loans For First Time Since 2020

17 Jan 2022 , 08:53 AM

Chinas central bank, on Monday cut the borrowing costs of its medium-term loans for the first time since April 2020 to cushion any economic slowdown. The Peoples Bank of China (PBOC) said it was lowering the interest rate on CNY 700 billion (USD 110.19 billion) of one-year medium-term lending facility (MLF) loans to some financial institutions by 10 basis points to 2.85 percent from 2.95 percent in previous operations. With CNY 500 billion of MLF loans maturing on Monday, the operation resulted a net CNY 200 billion of fresh fund injections into the banking system. The central bank also lowered the borrowing costs of seven-day reverse repurchase agreements, or repos, by the same margin to 2.10 percent from 2.20 percent, when it offered another CNY 100 billion of reverse repos into the banking system on the day, compared with CNY 10 billion of such short-term liquidity tool due on Monday.

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