China’s central bank on Monday cut two key interest rates that would likely translate into lower benchmark lending rates, in a bid to provide more support for the slowing economy.
The People’s Bank of China lowered rates on the one-year medium-term lending facility and seven-day reverse repurchase agreements by 10 basis points each, according to an official statement.
The MLF interest rate, which is used to price China’s benchmark loan prime rate, was cut to 2.85%, while the reverse repo rate was lowered to 2.1%, the PBOC said.
China slashed its benchmark LPR last month after top leaders pledged to prioritize growth stability. Monday’s rate cuts are expected to lead to a further cut in LPR, which will be released later this month.
China’s central bank also injected 700 billion yuan ($110.19 billion) worth of liquidity via the MLF and CNY100 billion of liquidity via reverse repos.
The rate cuts came as China released annual economic data, which showed the economy expanded 8.1% in 2021, but growth momentum continued to slow in the final months of the year. The cuts signaled Beijing’s determination to stabilize growth in 2022, as the world’s second-largest economy faces mounting headwinds from a property slump, scattered coronavirus outbreaks and sluggish domestic consumption.