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The Central Bank of China unexpectedly lowered the rate


August, 15 2023
watermark Economic news

China's central bank on Tuesday unexpectedly cut a number of interest rates for the second time in three months. Thus, the country's authorities are trying to support the slowing economic growth – with the help of additional measures to ease monetary policy.


The NBK reduced the interest rate on loans for a period of one year in the amount of 401 billion yuan ($55.25 billion) under the medium-term lending program (MLF) for some financial institutions by 15 basis points – to 2.50% from 2.65% earlier.


Such a move by the Chinese regulator came as a surprise to analysts and market participants. According to a Reuters poll, 20 participants, or 77%, predicted that the Central Bank would leave the MLF rate unchanged. And only six respondents predicted a slight reduction in the rate.


The Central bank of China also injected 204 billion yuan through seven-day reverse repos, while reducing the cost of borrowing by 10 bps – to 1.80% from 1.90% earlier.


According to analysts, this move opens the door for a reduction in the key interest rate on loans to first-class borrowers (LPR) next week.


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