Global Courant
BEIJING, CHINA – JUNE 13: A woman walks past the building of the People’s Bank of China (PBOC) on June 13, 2023 in Beijing, China.
Chinese news service | Chinese news service | Getty Images
China’s central bank cut its key medium-term lending rate on Thursday, a long-awaited move as the post-Covid recovery of the economy loses momentum.
The People’s Bank of China cut interest rates on 237 billion Chinese yuan ($33 billion) in one-year medium-term (MLF) loans to some financial institutions by 10 basis points – from 2.75% to 2.65%.
The central bank recently cut interest rates 400 billion yuan in one-year MLF loans in Augustmaking Thursday’s move the first such cut in 10 months.
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Shortly after the announcement, the dollar gained 0.2% against the Chinese yuan onshore to 7.1744 – its lowest level since November.
The Shanghai composite was 0.3% higher while the Shenzhen part lay flat. Hong Kong’s Hang Seng Index rose 1.3% and the Hang Seng Tech Index rose more than 2%.
Signal awareness
The central bank’s MLF cut is a sign of the “willingness” of Chinese policymakers to step in to help support the economy, said Brendan Ahern, chief investment officer of KraneShares.
“Demonstrating their awareness and willingness to support the economy, it is (a) acknowledgment that the post-Covid recovery is happening at a very lukewarm or incremental pace,” Ahern told CNBC’s “Street Signs Asia.”
He added that the decision on lending rates, scheduled for June 20, is also expected to see a cut government is taking further support measures to stimulate demand.
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