China's central bank unexpectedly trimmed a closely watched lending rate on...
SHANGHAI - China’s central bank unexpectedly trimmed a closely watched lending rate on Monday, the first such cut in more than four years and a signal to markets that policymakers are ready to act to prop up slowing growth.
The move cheered China’s bond market and comes just two weeks after the PBOC cut the borrowing cost on its medium-term lending facility , used by banks for longer-dated funding needs, by the same margin. Zhou Hao, economist at Commerzbank in Singapore said the reverse repo rate cut indicates a policy change in coming months, including “some fine-tuning to prioritize the pro-growth policy for the time being.”
That had raised some concerns the PBOC may be constrained in its efforts to ease policy. In a report released Saturday, the PBOC said it would maintain prudent monetary policy to prevent inflation from spreading. “Commercial banks comprehensively evaluate financing costs to decide the LPR, so lowering reverse repo rates could maintain monetary policy stability,” Yan said.
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