- OCBC
The People's Bank of China injected 140 billion yuan into China's economy on Wednesday, in latest attempt to prop up slowing economic growth, fuelling investors concerns over a "hard landing". The PBoC injected billions of yuan into the interbank money market through a short-term liquidity operation. The central bank introduced SLOs in 2013 as a supplement of its monetary policy tools in a bid to smooth fluctuations in liquidity and stabilize interbank funding costs. In addition to that, the central bank cut the one-year benchmark bank lending rate by 25 basis points and reserve requirements by 50 basis points for most big banks. The People's Bank said that the interest rate cut was to reduce "the social cost of financing to promote and support the sustainable and healthy developments of the real economy". It also acted to raise the flow of money in the economy by cutting the amount of cash banks must keep in reserve, effectively freeing them to lend more cash.
The recent moves are aimed at supporting slowing economic growth in the world's second biggest economy at a time of extreme volatility in Chinese as well as global stock markets. Nevertheless, markets were little influenced by the central bank's action. Chinese stocks closed before it was announced, with the Shanghai Composite index ending down 1.3% on Wednesday.
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