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China’s central bank said on Friday it has cut interest rates on another key monetary policy tool, capping off a week of easing measures that underscore official concern about a darkening outlook for the world’s second-largest economy.

In a response to Reuters questions, the People’s Bank of China (PBOC) said it had trimmed rates on its standing lending facility (SLF) loans by 10 basis points effective Jan. 17.

Under the SLF program, financial institutions can obtain temporary liquidity from the central bank.

The bank said it had lowered the overnight SLF rate to 2.95 per cent from 3.05 per cent, the seven-day rate to 3.10 per cent from 3.20 per cent, and the one-month rate to 3.45 per cent from 3.55 per cent.

Reuters had earlier reported, citing three sources with direct knowledge of the matter, that the bank planned to cut SLF rates after a series of reductions in China’s key interest rates, as Beijing eases monetary policy to shore up cooling activity.

The economy grew 4 per cent in the fourth quarter – the slowest rate in one-and-half years – weighed down by a deepening property-market slump and weak consumption amid sporadic COVID-19 outbreaks.

Analysts expect more easing measures in China in coming months, even as other major global central banks begin tightening policy and withdrawing unprecedented amounts of liquidity pumped into their economies to cushion the impact of the COVID-19 pandemic.

China will appropriately step up policy support for the economy as it faces new downward pressure, Premier Li Keqiang was quoted by state media as saying.

But Mr. Li, in remarks made on Thursday, reiterated that the government will not resort to “flood-like” stimulus.

“We see that the monetary policy easing cycle is only at the start. We’re expecting more cuts,” said Paula Chan, senior portfolio manager at Manulife Investment. She said she expects China’s benchmark 10-year yield to test a low of 2.5 per cent.

The yield on benchmark 10-year Chinese government bonds stood at 2.705 per cent on Friday evening. Earlier in the day, China’s two-year yield touched its lowest level since June, 2020, and was last at 2.16 per cent.

On Thursday, China trimmed loan prime rates, the benchmark rates for mortgages and other types of loans. On Monday, the PBOC surprised markets by cutting the borrowing costs of its medium-term loans for the first time since April, 2020, and also lowered a short-term lending rate.

Nomura analysts, however, believe the economic boost from rate cuts so far will be quite limited, as they have been too small to have a material impact.

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 direction and other money market rates in China.

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

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