Rate cuts from the PBOC: 1-Year MLF loans rate to 2.75% from 2.85%, repo rate cut also

The PBOC has cut the rate it charges on its one-year medium-term lending facility to 2.75% from 2.85% previously

• PBOC sells 400bn yuan 1-year MLF AT A LOWER RATE

The Bank also cut the rate on 7-day reverse repos to 2%, from 2.1% previously

• PBOC sets USD/ CNY reference rate for today at 6.7410 (vs. estimate at 6.7425)

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China's economy is struggling with:

• ongoing fresh COVID flare-ups & associated restrictions and lockdowns
• job security worries
• the deepening property crisis making borrowers wary of more debt

I posted over the weekend on the liquidity trap the country has become caught in:

• China’s low interest rates are failing to spur lending in the economy - 'liquidity trap'

China's fiscal authorities have been boosting stimulus, now the People's Bank of China adds monetary stimulus in.

Offshore yuan has dropped on the rate cut news. There is always chatter of a PBOC rate cut doing the rounds but it had largely dried up ahead of today's MLF maturity and expected partial rollover. A bit of a surprise from the PBOC today. In addition to the weaker yuan Chinese debt is higher (10yr government bonds up circa 0.7%)