PBOC reduces interest rate on 7-day reverse repos
Date
7/22/2024 3:21:43 AM
(MENAFN) On Monday, China's central bank, the People's bank of China (PBOC), announced a reduction in the interest rate on seven-day reverse repos, lowering it from 1.8 percent to 1.7 percent. This adjustment is part of the PBOC's strategy to enhance counter-cyclical measures aimed at providing better support for the real economy. In a statement released online, the PBOC explained that this move is intended to bolster economic stability and address current market conditions.
A reverse repurchase agreement, or reverse repo, is a financial operation where the central bank purchases securities from commercial banks through a bidding process, with a commitment to sell these securities back at a later date. This mechanism is used to manage short-term liquidity in the banking system and influence interest rates.
On Monday, the PBOC conducted reverse repos totaling 58.2 billion yuan, which is approximately 8.16 billion U.S. dollars, at the newly reduced interest rate of 1.7 percent. The primary goal of this operation was to maintain a reasonable and ample level of liquidity within the banking system. By adjusting the interest rate on reverse repos, the PBOC aims to ensure that banks have sufficient liquidity to support lending and other financial activities, thereby supporting broader economic stability and growth.
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