China unexpectedly cut a key interest rate on Tuesday and announced tax breaks for businesses, as weakening credit growth added to signs that the post-COVID recovery in the world’s second-largest economy is losing steam, reports the Financial Times. The People’s Bank of China cut the seven-day reverse repo rate, used to manage short-term liquidity in the banking system, in a move analysts said probably signalled more substantial monetary easing and stimulus measures to come.
Following the rate cut, the government released credit growth figures for May that analysts said fell well short of forecasts as a weak property market weighed on consumer sentiment.
China’s economy staged a comeback in the first quarter after the lifting of draconian COVID-19 controls, but it has begun to falter in recent weeks as export growth has slowed and the real estate market has struggled to emerge from a long slump.
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