China’s benchmark money-market rate dropped for a sixth week, the longest run of declines since 2009, as the central bank guided funding costs lower.
The People’s Bank of China cut the yield in its reverse-repurchase operations by 10 basis points this week, the fourth reduction since early March. Consumer prices gained 1.4 percent last month from a year earlier, data from the statistics bureau showed Friday, trailing the government’s 3 percent inflation target for this year.
The seven-day repurchase rate, a gauge of interbank funding availability, slid 50 basis points, or 0.5 percentage point, this week to 2.90 percent in Shanghai, a weighted average compiled by the National Interbank Funding Center shows. It dropped 12 basis points Friday.
Inflation “remains low, suggesting there’s little change in a tepid economy and weak demand,” said Liu Dongliang, a senior analyst at China Merchants Bank Co. in Shanghai. “It’s still necessary to roll out measures to stabilize growth, and loosen monetary policy.”
The PBOC lowered the interest rate in the seven-day reverse-repo operations to 3.45 percent this week, compared with 3.85 percent in January. The central bank drained a net 15 billion yuan ($2.4 billion) in the last three days, after injecting funds for two consecutive weeks, data compiled by Bloomberg show.
The cost of one-year interest-rate swaps, the fixed payment to receive the floating seven-day repo rate, dropped 16 basis points this week to 3.09 percent, data compiled by Bloomberg show. It was steady Friday.
The yield on the December 2024 notes rose 11 basis points this week to 3.70 percent, prices from the National Interbank Funding Center show. That matched the increase in the period ended March 6. The yield fell one basis point Friday.
— With assistance by Helen Sun