“It is basically a coordinated effort across all the key interest rates to ease monetary policy,” said Lynn Song, Greater China chief economist at ING Bank. “It’s worth highlighting this round of easing kicked off with the seven-day RR, which may be a signal of its future role as the main policy rate.”
The People’s Bank of China (PBOC) unexpectedly lowered the rate on its one-year policy loans by the most since April 2020 days after cutting a key short-term rate, in a sign of greater support for the slowing economy.
The central bank lowered the rate of medium-term lending facility (MLF) by 20 basis points to 2.3%, according to a statement Thursday, the first reduction in almost a year. The cut followed the PBOC’s trim of the seven-day reserve repo rate by 10 basis points on Monday. The monetary authority has recently downplayed the MLF rate in favour of the short-term rate to guide markets in a way more similar to global peers.
