People's Bank of China rejoins global monetary easing wave

Monday 30 March 2020 09:32 CET | News

The People’s Bank of China (PBOC) has slushed the interest rate it charges on loans to banks by the biggest amount since 2015, according to CPI Financial.

The move aims to reduce the economic impact from the coronavirus pandemic. The Chinese central bank reduced the interest rate on the seven-day reverse repurchase agreements from 2.4% to 2.2% as it injected CNY 50 billion (EUR 6.3 billion) into the banking system. The central bank said this will keep liquidity enough to help the real economy.

Furthermore, the first cut to a PBOC policy rate since February 2020 is in line with a pledge by the government to increase support to the economy through increased sales of sovereign debt, as domestic, and international demand slumps due to COVID-19 pandemic.

China will increase its fiscal deficit as a share of gross domestic product, issue special sovereign debt and allow local governments to sell more infrastructure bonds as part of a package to stabilise the economy.

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Keywords: People’s Bank of China, PBOC, banks, loans, China, coronavirus
Categories: Banking & Fintech
Countries: China
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