Rate cuts from the PBOC: 1-Year MLF loans rate to 2.75% from 2.85%, repo rate cut also
The PBOC has cut the rate it charges on its one-year medium-term lending facility to 2.75% from 2.85% previously
PBOC sells 400bn yuan 1-year MLF AT A LOWER RATE
The Bank also cut the rate on 7-day reverse repos to 2%, from 2.1% previously
China’s economy is struggling with:
Ongoing fresh COVID flare-ups & associated restrictions and lockdowns
Job security worries
Deepening property crisis making borrowers wary of more debt
Offshore yuan has dropped on the rate cut news.
There is always chatter of a PBOC rate cut but it had largely dried up ahead of today’s MLF maturity and expected partial rollover. A bit of a surprise from the PBOC today.
In addition to the weaker yuan Chinese debt is higher (10yr government bonds up circa 0.7%)