China support middle low economy with low interest rates

For the first time since August 2023, China has lowered both its short- and long-term interest rates, indicating that it wants to spur economic growth in the second-biggest country in the world.

The reductions followed a plenum meeting by China’s senior officials and the release of weaker-than-expected second-quarter GDP figures.

The nation is dealing with a protracted real estate crisis, skyrocketing debt, low consumer and corporate confidence, and escalating trade tensions.

The seven-day reverse repo rate was lowered by the People’s Bank of China (PBOC) to 1.7% from 1.8%, along with enhancements to the open market operations system.

In addition, the PBOC reduced the interest rates on the loans it provides to commercial banks under the standing lending facility (SLF), which helps them meet short-term financial needs.

Additionally, the PBOC modified its lending program, removing the need for collateral for loans under the medium-term lending facility starting in July.

The PBOC redesigned its conduit for transmitting monetary policy prior to making this announcement.


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