Shanghai Stock Exchange Composite Index data

China's Central Bank Cuts Key Rates, 7-Day Reverse Repo to 1.7%, 1-Year LPR to 3.35%, 5-Year LPR to 3.85%

Jul 22, 2024, 01:41 AM

China's central bank has implemented a series of monetary policy adjustments to support the real economy and alleviate pressures in the financial markets. The People's Bank of China (PBOC) announced a 10 basis point cut to the seven-day reverse repo rate, lowering it to 1.7%, marking the first reduction since August 2023. Additionally, the PBOC has reduced the one-year loan prime rate (LPR) to 3.35% and the five-year LPR to 3.85%, both falling below economists' expectations. The central bank also plans to lower collateral requirements for medium-term lending facility (MLF) loans starting this month, aiming to increase the size of tradable bonds and ease supply and demand pressures in the bond market. These measures are part of a broader strategy to strengthen counter-cyclical adjustments and stimulate economic growth amid ongoing economic challenges. Notably, the USDCNH didn't fly higher immediately following these cuts.