China surprisingly reduces interest rates to back COVID-damaged economy

(MENAFN) The People’s Bank of China (PBOC) on Monday declined its key interest rates for the initial time since January to raise its backing for the economy damaged by coronavirus lockdowns and a property downturn.

The bank declined medium-term loan rate by 10 basis points to 2.75 percent from 2.85 percent, in line with a declaration from the PBOC.

It also cut the seven-day reverse repo rate to 2 percent from 2.1 percent, inserting 2 billion yuan (nearly USD300 million) into the banking system.

The bank had reduced both rates by 10 basis points at the start of the year.

In the meantime, the world's second-biggest economy witnessed slower-than-estimated industrial manufacture and retail sales expansion, suggesting the zero-COVID policy remains to decline consumer request.

The National Bureau of Statistics stated that China's industrial output rose by 3.8 percent annually last month, lower than market forecast of 4.6 percent.

The retail trade surged 2.7 percent from 2021 last month, missing economists’ estimation of a 5 percent increase.


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