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China set to cut interest rates on standing lending facility loans – sources

China set to cut interest rates on standing lending facility loans - sources
© Reuters. FILE PHOTO: A woman walks past the headquarters of the People’s Bank of China (PBOC), the central bank, in Beijing, China September 28, 2018. REUTERS/Jason Lee

SHANGHAI (Reuters) – China will on Friday cut the interest rates on a key monetary policy tool by which financial institutions can obtain temporary liquidity from the central bank, three sources with direct knowledge of the matter said.

The 10-basis-point cut in the rates on People’s Bank of China’s (PBOC) standing lending facility (SLF) loans follows a series of reductions in China’s key interest rates, as Beijing eases monetary policies to stabilize a slowing economy.

China’s economy grew 4% in the fourth quarter – the slowest rate in one-and-half years – as growth loses momentum on a property market downturn and weak consumption. Analysts expect more easing measures in the coming months.

The borrowing cost on overnight, seven-day and one-month SLF loans will be lowered by 10 basis points, to 2.95%, 3.10% and 3.45%, respectively, according to the sources.

PBOC did not immediately respond to a request from Reuters for comment.

SLF was created by PBOC in 2013 to meet temporary liquidity needs from financial institutions, and its interest rates are determined by monetary policy directions and other money market rates in China.

On Thursday, China reduced loan prime rates (LPRs), the benchmark rates for mortgage and other types of loans. On Monday, PBOC cut the borrowing costs of its medium-term loans for the first time since April 2020.

Chinese banks can borrow SLF loans from PBOC using qualified bonds and other credit assets as collateral.

Source: Investing.com

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