China’s central bank PBoC lowered interest rate on 7-day reverse repo by -20bps to 2.20% today to inject CNY 50B into the banking system. That’s firstly an unscheduled announcement, and secondly, the largest cut since 2015. Thirdly, the 7-day reverse rate is now its lowest on record.
The cut signals that PBOC has entered “a stage with stronger counter-cyclical adjustment,” out of consideration of both domestic demand and global virus outbreak, Ma Jun, a PBOC adviser, said in a statement. “The PBOC doesn’t use its bullets all at once. China still has plenty of room in monetary policy.”
