You are here

PBOC said to lower medium-term interest rates for China's banks

37227788 - 19_01_2016 - CHINA-YUAN_OUTFLOWS.jpg
China's central bank offered to reduce the medium-term borrowing costs it charges lenders for the second time this year, according to a person with direct knowledge of the matter.

[BEIJING] China's central bank offered to reduce the medium-term borrowing costs it charges lenders for the second time this year, according to a person with direct knowledge of the matter.

The People's Bank of China (PBOC) has told banks it can provide cash through its medium-term lending facility at 2.85 per cent for six-month loans, down from 3 per cent, and 3 per cent for one-year borrowing, down from 3.25 percent, according to the person, who asked not to be identified because the plans aren't public.

Such a reduction would amount to a kind of monetary easing outside of traditional tools such as lowering the benchmark lending or deposit rates or the required-reserve ratio for the biggest banks.

Overuse of RRR cuts may add too much pressure on short-term interest rates and would therefore be bad for stabilizing capital flows and the exchange rate, PBOC researcher Ma Jun said in a China Business News report published last month.

The PBOC didn't immediately respond to request for comment.

BLOOMBERG

BT is now on Telegram!

For daily updates on weekdays and specially selected content for the weekend. Subscribe to t.me/BizTimes