China cut interest rates for standing lending facility loans in April
SHANGHAI (Reuters) - China’s central bank said it lowered interest rates on its standing lending facility (SLF) in April, catching up with similar reductions in other liquidity tools as part of Beijing’s efforts to support the coronavirus-hit economy.
In the first-quarter monetary policy report published on Sunday, the People’s Bank of China (PBOC) said it had cut SLF rates by 30 basis points on April 10, bringing borrowing costs on overnight, seven-day and one-month loans to 3.05%, 3.2%, 3.55%, respectively.
The PBOC has been rolling out a slew of measures to backstop the economy since the coronavirus outbreak, cutting key policy rates and reducing the amount banks must hold as reserves for the dual purpose of boosting financial system liquidity and lowering financing costs.
In Sunday’s report, the PBOC said it will step up support for the economy, and dropped its long-standing vow to refrain from “flood-like” stimulus in a move that suggested authorities were prioritising growth and job creation as China struggles with its worst slump in decades.
Premier Li Keqiang told a recent cabinet meeting that the government will aims to complete issuance of another 1.0 trillion yuan local government special bonds by end-May.
The central bank has lowered one-year medium-term lending facility (MLF) loans to financial institutions CNMLF1YRRP=PBOC twice this year by a total of 30 basis points to 2.95%, the lowest since the liquidity tool was introduced in September 2014.
SLF loans have a shorter maturity and differs from the MLF, which the PBOC uses to manage longer-term liquidity in the banking system and guides the lending benchmark loan prime rate (LPR).
The PBOC said the SLF rate serves as the ceiling of its interest rate corridor and offers short-term liquidity support based on financial institutions’ demand, according to the report.