China’s central bank cut a short-term policy rate as part of reductions initiated in July, as the nation’s domestic economic slowdown deepens.
The People’s Bank of China (PBOC) on Monday lowered the 14-day reverse repurchase rate to 1.85% from 1.95% previously. The central bank also injected RMB74.5 billion ($13.65 billion) of liquidity into the banking system via the tool, it said in a statement.
The move came ahead of the National Day Holiday that will last seven days from Oct 1. The PBOC typically offers 14-day loans ahead of long break. The last time it provided the lending was in February ahead of the week-long Lunar New Year break.
The cut reflects a catch-up with a 10-basis-point cut in the seven-day reverse repo rate in July, said Frances Cheung, head of foreign-exchange and rates strategy at Oversea-Chinese Banking Corp. “The market will not get overly excited about it,” she added.
