CHINA: SURPRISE RATE CUT AS GROWTH FALTERS – UOB GROUP
The People’s Bank of China (PBOC) unexpectedly cut its key 7-day reverse repo rate by 10 bps to 1.7% on Mon. It signals policymakers’ concerns over the slowing growth, UOB Group Economist Ho Woei Chen notes.
PBOC cuts rates amid the slowing growth
“PBOC unexpectedly cut its key 7-day reverse repo rate by 10 bps to 1.7% on Mon, prompting banks to lower the 1Y and 5Y LPRs by a similar quantum to 3.35% and 3.85% respectively. The earlier than expected rate cut in Jul likely signaled policymakers’ concerns over the slowing growth while the easing pressure on the CNY could also be a factor.”
“The central bank had left its 1Y medium-term lending facility (MLF) rate unchanged at 2.50% last week. The move today indicates that PBOC is shifting to the 7-day reverse repo rate as the main policy benchmark.”
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