China’s central bank cuts key rates amid weak economic data

The People’s Bank of China (PBOC) unexpectedly lowered key rates on August 15 due to a sharp slowdown in economic growth in July and a drop in activity in industry and retail trade. The reasons for the weakening of growth were the fight against coronavirus and the crisis in the real estate market.

NBK lowered by 10 bp. two key interest rates: the rate on loans for a period of one year under the medium-term lending program (MLF) was lowered from 2.85% to 2.75% per annum, and the seven-day repo repurchase rate – from 2.1% to 2%. Analysts expect another rate cut, which affects interest on new and outstanding loans, next week.