The PBOC has cut the rate it charges on its one-year medium-term lending facility to 2.75% from 2.85% previously

The Bank also cut the rate on 7-day reverse repos to 2%, from 2.1% previously


China's economy is struggling with:

  • ongoing fresh COVID flare-ups & associated restrictions and lockdowns
  • job security worries
  • the deepening property crisis making borrowers wary of more debt

I posted over the weekend on the liquidity trap the country has become caught in:

China's fiscal authorities have been boosting stimulus, now the People's Bank of China adds monetary stimulus in.

Offshore yuan has dropped on the rate cut news. There is always chatter of a PBOC rate cut doing the rounds but it had largely dried up ahead of today's MLF maturity and expected partial rollover. A bit of a surprise from the PBOC today. In addition to the weaker yuan Chinese debt is higher (10yr government bonds up circa 0.7%)

cnh chart pboc rate cut