China’s central bank lowered the interest rate on 14-day reverse repurchase agreements on Wednesday, in step with a similar cut in the 7-day repo rate last month, to ease monetary conditions, reported Reuters.
Traders said the move was expected as it keeps the shape of the yield curve steady while some economists noted this could flag more easing ahead as economic growth slows.
The People’s Bank of China (PBOC) said on its website that it was lowering the 14-day reverse repo rate to 2.65% from 2.7%, while keeping the 7-day rate unchanged at 2.50%. The PBOC unexpectedly trimmed the seven-day lending rate by the same margin in November for the first time in more than four years, a signal to markets that policymakers are ready to act to prop up slowing growth.
“The PBOC will continue to pay close attention to liquidity conditions and flexibly conduct open market operations to keep the year-end liquidity steady,” the central bank said in a statement on its website.