© Reuters. FILE PHOTO: People wearing face masks walk past the headquarters of Chinese central bank People’s Bank of China (PBOC), April 4, 2020. REUTERS/Tingshu Wang/File Photo/File Photo
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SHANGHAI (Reuters) – China’s central bank lowered the borrowing cost of 14-day reverse repos on Monday and stepped up cash injections to counteract higher demand towards the quarter-end.
The People’s Bank of China (PBOC) injected 2 billion yuan ($286.54 million) through 7-day reverse repos and another 10 billion yuan through the 14-day tenor, it said in a statement.
The PBOC said the higher daily cash injection, up from the daily 2 billion yuan offerings since July, was to “maintain liquidity level stable at end of the quarter”, according to the statement.
The PBOC also resumed 14-day operations for the first time since late January, while lowering the interest rate on liquidity tool by 10 basis points to 2.15% from 2.25%.
The reduction was a catch-up move to the central bank’s decision in August by cutting some key interest rates, including the 7-day reverse repo rate, to revive credit demand and prop up the sputtering economy.
With no reverse repo maturing on Monday, the PBOC injected a net 12 billion yuan via the short-term liquidity instruments.
($1 = 6.9799 Chinese yuan)