China’s PBoC cut the interest rate on its one-year medium-term lending facility today, by 20bps to 2.95%. That’s the lowest level on record and is expected to inject CNY 100B into the market. The move should also pave the way for a similar reduction in the benchmark Loan Prime rate later on the 20th, to lower financing costs for businesses.
Earlier in the month, PBoC announced to cut the RRR for small banks to release reserves. The first phase would take effect today, and free up around CNY 200B of long-term funds. A total of CNY 400B of liquidity is expected after the second-phase of reserve ratio cut due in mid-May.
