China's central bank on Tuesday unexpectedly cut a number of interest rates for the second time in three months. Thus, the country's authorities are trying to support the slowing economic growth – with the help of additional measures to ease monetary policy. The NBK reduced the interest rate on loans for a period of one year in the amount of 401 billion yuan ($55.25 billion) under the medium-term lending program (MLF) for some financial institutions by 15 basis points – to 2.50% from 2.65% earlier. Such a move by the Chinese regulator came as a surprise to analysts and market participants. According to a Reuters poll, 20 participants, or 77%, predicted that the Central Bank would leave the MLF rate unchanged. And only six respondents predicted a slight reduction in the rate. The Central bank of China also injected 204 billion yuan through seven-day reverse repos, while reducing the cost of borrowing by 10 bps – to 1.80% from 1.90% earlier. According to analysts, this move opens the door for a reduction in the key interest rate on loans to first-class borrowers (LPR) next week.
