The People’s Bank of China (central bank) injected the equivalent of around 50 billion euros, with a one-year interest rate of 2.5%. This represents a cut of 15 basis points in the rate for loans to financial institutions, compared to the previous month.
The indicator, established as a benchmark for interest rates in 2019, is used to set the price of new loans – generally for companies – and credit with variable interest, which is pending repayment.
The calculation is based on price contributions from a range of banks – including smaller lenders that tend to have higher funding costs and greater exposure to non-performing loans – and aims to reduce borrowing costs and support the “real economy”. ”.
The decision is part of the government’s efforts to “strengthen the countercyclical adjustment and stabilize market expectations”, according to a dispatch released by the official Xinhua news agency.
The central bank also announced the injection of the equivalent of almost 26 billion euros, through reverse repurchase agreements (‘reverse repo’), for a period of seven days, in which the issuing entity buys securities from commercial banks at a specific price with a commitment to resell them at a fixed price later.
The operation was carried out with an interest rate of 1.8%, below the previous rate of 1.9%.
The measure takes place on the same day as the release of data on industrial production in the country, which grew 3.7%, year-on-year, in July, a value that represents a slowdown in relation to June data (4.4%).
The value for the seventh month of the year fell short of the most widespread forecasts among analysts, who expected an increase of around 4.7% compared to the same period in 2022.
After a promising start to the year, the post-pandemic economic recovery shows signs of slowing down. Weak domestic and international demand, risks of deflation and insufficient stimuli, along with a housing crisis and lack of confidence in the private sector are the main causes for the slowdown in the world’s second largest economy, according to analysts.
*With Lusa
