Central Banks
China’s Surprise Rate Cut Fuels Expectations of More Easing
- Seven-day reverse repo rate lowered by 10 basis points
- Unexpected move shows Beijing’s concerns about slowing growth
The People's Bank of China (PBOC) building in Beijing.
Source: Bloomberg
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China’s central bank surprised most economists and market participants by cutting a short-term policy interest rate, a sign that officials are increasingly concerned about faltering growth and are stepping up stimulus to boost the recovery.
The People’s Bank of China lowered the seven-day reverse repurchase rate by 10 basis points to 1.9% on Tuesday, the first reduction in the rate since August 2022. That increases the likelihood the central bank will reduce its one-year loan rate on Thursday, with banks expected to lower their lending rates shortly after.