China's central bank on Wednesday cut the interest rate on its medium-term funding for financial institutions to the lowest level on record, in an attempt to combat the economic fallout from the coronavirus health crisis.
FILE PHOTO: A woman wearing a mask walks past the headquarters of the People's Bank of China, the central bank, in Beijing, China, as the country is hit by an outbreak of the new coronavirus, February 3, 2020. REUTERS/Jason Lee/File Photo
The move should pave the way for a similar reduction to the country’s benchmark loan prime rate , which will be announced on the 20th, to lower financing costs for companies hit by pandemic. The cut came largely in line with market expectations, as economists believe the central bank would keep its yield curve steady by lowering the MLF rate by the same margin as the cut to the 7-day reverse repo rate in late March.
Global central banks have rolled out unprecedented stimulus measures in the past few weeks, cutting rates sharply and injecting trillions of dollars to backstop their economies as many countries have been put under tight lockdowns to contain the pandemic.There is no MLF loans due to expire on the day, though a batch of 200 billion yuan worth of such loans is maturing on Friday.
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