SHANGHAI (Reuters) – China’s central bank cut the interest rate on its medium-term lending facility (MLF) on Tuesday for the first time since early 2016, as policymakers work to prop up a slowing economy hit by weaker demand at home and abroad.
The People’s Bank of China (PBOC) said on its website that it was lowering the rate on one-year MLF loans by 5 basis points (bps) to 3.25% from 3.30% previously.
PBOC - Yuan - Institutions - Liquidity - Tool
The PBOC said it had injected 400 billion yuan ($56.92 billion) into financial institutions via the liquidity tool, slightly less than a batch of MLF loans worth 403.5 billion yuan due to mature on Tuesday.
The PBOC’s decision to trim medium-term borrowing costs comes after it surprised markets by not issuing targeted medium-term loans in October, adding to uncertainty over how policymakers plan to stabilize the slowing economy.
Note - Week - Analysts - Nomura - Forecast
In a note late last week, analysts at Nomura said they maintained their forecast that China’s real GDP growth would slow to 5.8% in the fourth quarter, leading to greater market volatility.
“Beijing will likely introduce more policy easing measures in coming quarters...
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