Interest rates

China set to cut interest rates on permanent loans – sources

SHANGHAI, Jan 21 (Reuters) – China will cut interest rates on Friday on a key monetary policy tool through which financial institutions can obtain temporary liquidity from the central bank, three sources with direct knowledge of the news said. ‘case.

The 10 basis point cut in rates on the People’s Bank of China (PBOC) Standing Lending Facility (SLF) loans follows a series of cuts in China’s key interest rates, as Beijing eases policies monetary policy to stabilize a slowing economy.

China’s economy grew 4% in the fourth quarter – the slowest rate in a year and a half – as growth loses momentum due to a slowing property market and weak consumption. Analysts expect further easing measures in the coming months.

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The cost of borrowing on SLF overnight, seven-day and one-month loans will be lowered by 10 basis points, to 2.95%, 3.10% and 3.45%, respectively, according to the sources.

The PBOC did not immediately respond to a Reuters request for comment.

The SLF was created by the PBOC in 2013 to meet the temporary liquidity needs of financial institutions, and its interest rates are determined by monetary policy guidelines and other money market rates in China.

On Thursday, China cut prime lending rates (LPRs), benchmark rates for mortgages and other types of loans. On Monday, the PBOC cut borrowing costs on its medium-term loans for the first time since April 2020.

Chinese banks can borrow SLF loans from the PBOC using qualified bonds and other credit assets as collateral.

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Reporting by Xiangming Hou and Ryan Woo in Beijing and Hongwei Li and Steven Bian in Shanghai; Editing by Jacqueline Wong and Simon Cameron-Moore

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