PBOC Lowers Short-Term Policy Loan Costs After Key Rate Cuts

China’s central bank lowered the interest rate on a shorter-term emergency policy loan, the latest in a series of easing measures to spur a slowing economy.

The People’s Bank of China cut the overnight standing lending facility rate by 10 basis points to 2.95%, according to a statement on the central bank’s website, which was dated Jan. 17. The seven-day and one-month rates were also lowered by the same magnitude, with the change effective from Jan. 17.

The SLF rates usually move in tandem with key policy rates including the seven-day reverse repurchase rate and the one-year medium-term lending facility rate, which were cut by 10 basis points on Monday.

Introduced in 2013, the SLF is less known because only policy and major banks can apply for the funds, and the PBOC usually only discloses the operations at the beginning of each month. The SLF rates are considered the upper bound of China’s interest rate corridor, within which the PBOC guides market rates to move.

Source: Bloomberg