BEIJING (Reuters) – China’s central bank will cut rates on its 25 basis points (bps) repayment facility to support rural sector and small businesses, effective December 7, the Securities Times reported on Tuesday, citing sources .
But the chances of a key rate cut remain low in the short term, analysts say.
The three-month repayment rate will be lowered to 1.7%, while the six-month rate will be lowered to 1.9% and the one-year rate will be lowered to 2%, the newspaper reported.
A banking source confirmed the rate cut to Reuters.
“Today’s loans are based on the new interest rate. The rate cut should be in line with the RRR cut, and these are measures to support the real economy,” the source told Reuters .
In July 2020, the central bank cut rediscount and repayment rates by 25 basis points for small businesses and the rural sector.
Investors are watching closely whether the central bank will cut its benchmark lending rate, or prime lending rate (LPR), in the coming months, after announcing on Monday that it would cut banks’ reserve requirement rates from the December 15.
The world’s second-largest economy faces multiple headwinds heading into 2022, due to a real estate slowdown and tight COVID-19 restrictions that have hampered consumption.
“We believe Beijing may need to significantly step up its policy easing measures, including reducing some real estate restrictions in spring 2022 to avoid a hard landing,” Ting Lu, chief China economist at Nomura, said in a statement. note.
“We could see another 50bp reduction in the RRR in the first half of 2022, but we still consider the probability of a cut in policy rates to be quite low, due to the high inflation of the PPI and the rise in the rate. ‘IPC. “
(Reporting by Stella Qiu, Xiangming Hou and Kevin Yao; Editing by Tom Hogue and Sam Holmes)
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