China's Central Bank Surprises with Steep Rate Cuts and Unscheduled Lending to Bolster Economy

Mumbai, 24 Jul 2024 (Commoditiescontrol): China's central bank surprised markets with an unscheduled lending operation at significantly lower rates, signaling stronger monetary stimulus to support the struggling economy.

The People's Bank of China (PBOC) issued 200 billion yuan ($27.5 billion) in one-year loans under its Medium-Term Lending Facility (MLF) at 2.30%, a 20 basis point decrease. Additionally, 235.1 billion yuan was injected through seven-day reverse repos at 1.70%.

This move follows the central bank's cut of several benchmark lending rates on Monday, after a leadership meeting outlining major reforms. The urgency of these actions suggests more severe deflationary pressures and weak consumer demand than anticipated.

In response, the Hang Seng China Enterprises index dropped 1%, and sovereign bond yields fell. This reaction comes amid recent weaker-than-expected GDP data. (By Commoditiescontrol Bureau; +91-9820130172)