China’s central bank on Monday cut the interest rates of its medium-term lending facility (MLF) loans and reverse repos by 10 basis points.
This came amid the country’s efforts to lower lending cost and further shore up economic growth.
The People’s Bank of China (PBOC) lowered the rate of 700 billion yuan (about 110 billion U.S. dollars) worth of one-year MLF to financial institutions to 2.85 per cent, compared with 2.95 per cent on the previous operation.
The PBOC also added 100 billion yuan of funds into the market via seven-day reverse repos at an interest rate of 2.1 per cent Monday, down from 2.2 per cent.
With 500 billion yuan worth of MLF and 10 billion yuan worth of reverse repos maturing on the same day, the aforementioned moves will lead to a net liquidity injection of 290 billion yuan into the market.
The MLF tool was introduced in 2014 to help commercial and policy banks maintain liquidity by allowing them to borrow from the central bank using securities as collateral.
A reverse repo is a process in which the central bank purchases securities from commercial banks through bidding, with an agreement to sell them back in the future.
China will continue to implement prudent monetary policies that are flexible and appropriate, with liquidity maintained at a reasonable and ample level, said a tone-setting economic work conference held in Dec. 2021. (Xinhua/NAN)
