China cuts a key policy rate for first time in 10 months as economic rebound cools

China’s central bank lowered its key medium-term lending rates on Thursday, in a much anticipated move as the economy’s post-Covid recovery continues to lose momentum.

The People’s Bank of China lowered the rate of one-year medium-term lending facility (MLF) loans to some financial institutions by 10 basis points from 2.75% to 2.65%.

The central bank last lowered the rate on 400 billion yuan of one-year MLF loans in August, making Thursday’s move the first such cut in 10 months.

China’s medium-term lending facility is a funding channel introduced to allow the central bank to inject liquidity into the banking system and influence interest rates for certain loans.

Earlier this week, the central bank cut its seven-day reverse repurchase rate by 10 basis points from 2% to 1.9%, injecting 2 billion Chinese yuan through its seven-day repos. China’s largest state-owned commercial banks cut deposit rates last week, according to CNBC checks.

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