China central bank cuts rates for second time in three months to support economy

SHANGHAI/SINGAPORE  – China’s central bank unexpectedly cut key policy rates for the second time in three months on Tuesday, in a fresh sign that the authorities are ramping up monetary easing efforts to boost a sputtering economic recovery.

The People’s Bank of China (PBOC) said it lowered the rate on 401 billion yuan ($55.25 billion) worth of one-year medium-term lending facility (MLF) loans to some financial institutions by 15 basis points to 2.5 percent from 2.65 percent previously.

In a Reuters poll of 26 market watchers conducted this week, 20 participants, or 77 percent, predicted that the central bank would leave the MLF rate unchanged. Only six respondents forecast a marginal rate reduction.

The central bank also injected 204 billion yuan through seven-day reverse repos while cutting borrowing costs by 10 basis points to 1.8 percent from 1.9 percent previously, it said in an online statement.

The PBOC lowered key policy rates in June to prop up the broad economy, but data has been increasingly weak since.

($1 = 7.2585 Chinese yuan)