Short-term interbank interest rates have dropped to a three-year low as the government aims to bolster economic growth through facilitating loans to households and small businesses.
The Shanghai Interbank Offered Rate, or Shibor, fell to 1.42% on Wednesday, its lowest reading since 2015, according to the Wall Street Journal, although it rose slightly to 1.62% the following day.
The interbank rate drop conforms to the central bank’s plans to channel liquidity to commercial banks for the purpose of small loans to retail clients, after a wider deleveraging campaign delivered a hit to the country’s credit growth.
At the end of July, the People’s Bank injected Rmb 502 billion ($73 billion) to the commercial banking sector, ready to deploy as short-term loans to boost domestic demand.
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