China central bank cuts rates to boost economic recovery; a second rate cut in three months
banking system liquidity reasonably ample", the PBOC said in an online statement. The MLF rate serves as a guide to China’s lending benchmark loan prime rate (LPR) and markets mostly use the medium-term policy rate as a precursor to any changes to the lending benchmarks.
The monthly fixing of the LPR is due next Monday. PBOC’s move to cut rates and loosen monetary policy comes at a time when other major global central banks are in the policy tightening cycles to tackle high inflation.
The latest rate cut by China’s central bank has widened the yield gap with other major economies. This has pressurized the yuan amid risks of capital outflows.
China's yuan has fallen 5% against the dollar so far this year, becoming one of the worst performing Asian currencies. The yuan traded at 7.2842 per dollar as of 0145 GMT, compared with the previous close of 7.2580, Reuters reported.
Meanwhile, yields on China's 10-year government bonds eased to 2.56%, the lowest level since May 2020. (With inputs from Reuters)
. Read more on livemint.com
