The People’s Bank of China (PBOC) has implemented a reduction in a short-term policy rate, continuing the series of cuts initiated in July as the country faces a further deceleration in its domestic economy.
On Monday, the central bank decreased the 14-day reverse repurchase rate from 1.95% to 1.85%, while also releasing 74.5 billion yuan ($10.6 billion) into the banking system through the tool, according to an official statement. This decision comes ahead of the upcoming National Day Holiday, which spans seven days starting from October 1.
Traditionally, the PBOC provides 14-day loans before an extended break, with the last instance of such lending occurring in February before the week-long Lunar New Year holiday.
Frances Cheung, the head of foreign-exchange and rates strategy at Oversea-Chinese Banking Corp, noted that the recent rate reduction is in line with the 10-basis-point decrease in the seven-day reverse repo rate back in July, with expectation that the market is unlikely to exhibit an overly enthusiastic response to this move.
