2023-08-15 03:52:57
The People’s Bank of China (the country’s central bank) surprised the markets by cutting its key interest rate by the most since 2020, to support an economy that faces new risks due to a deteriorating real estate sector and weak consumer spending.
The People’s Bank of China cut the interest rate on its one-year loans (the Medium-Term Lending Facility) by 15 basis points to 2.5% on Tuesday, its second cut since last June.
All but one of the 15 analysts surveyed by Bloomberg expect the interest rate to remain unchanged. The short-term interest rate also fell by 10 basis points.
The surprise move came shortly before the release of disappointing economic activity data for July, which showed that growth in consumer spending, industrial production and investment missed expectations, while unemployment increased.
China’s National Bureau of Statistics said domestic demand is “insufficient” so far, and “the foundation of economic recovery still needs more support.” The bureau added in a statement that China needs to “intensify its macroeconomic policy adjustment, focus on boosting domestic demand, boosting confidence and fending off risks.”
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