China central bank cuts 14-day reverse repo rate, steps up cash injections

CHINA’S central bank lowered the borrowing cost of 14-day reverse repos on Monday (Sep 19) and stepped up cash injections to counteract higher demand towards the quarter-end.

The People’s Bank of China (PBOC) injected 2 billion yuan (S$402 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 per cent from 2.25 per cent.

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. REUTERS