PBoC cut borrowing costs to support slowing economy

By FXStreet FXStreet (Mumbai) – In an attempt to tackle a flagging economy, the People’s Bank of China today cut interest rates for loans made under the standing lending facility (SLF). The PBoC decided to cut the overnight SLF lending rate to 2.75% and the seven-day rate to 3.25% as. The objective is to inject cash into the banking system to support the slowing economy. The SLF was launched in 2013 to supplement other monetary policy tools such as open market operations.

The overnight rate will be cut to 2.75 per cent while the seven-day rate is to be slashed to 3.25 per cent, effective Friday. The rates now stand at 4.5 per cent and 5.5 per cent, respectively.

With this step the central banks plans to lower borrowing costs for businesses. The decision has come at a time when Chinese banks face a surge in troubled loans and is in line with recent policy easing to support the slowing economy.

The decision comes on the heels of the six benchmark rate cuts in the last twelve months. China’s central bank cut interest rates on for the sixth time in less than a year on 23rd October. It also lowered the amount of …read more

Source:: FX Street