The People’s Bank of China lowered the rate on its one-year loans or medium-term lending facility by 15 basis points (100bps = 1 percentage point) to 2.5% on Tuesday. All but one of the 15 analysts surveyed by Bloomberg had predicted the rate would stay unchanged. The seven-day reverse repurchase rate, a short-term policy rate, was cut by 10bps to 1.8%.
The surprise move came shortly before the release of July economic activity data from the National Bureau of Statistics that showed a faltering recovery.
The central bank’s surprise rate cut followed a 10bps reduction to the MLF rate in June and a slew of disappointing economic data recently.
Russia hikes rates to prop up rouble
Russia’s central bank on Tuesday hiked its key interest rate from 8.5% to 12%, after the rouble crashed to a more than 16-month low against the dollar. The rouble has shed around 30% of its value against the dollar since the start of the year.
