The People's Bank of China cut its key short-term interest rate for the first time in nearly a year, stepping up support for growth as it shifts to a new policy benchmark.
The People's Bank of China said in a statement on Monday that the seven-day reverse repurchase rate was cut by 10 basis points to 1.7 percent, adding that the move aims to improve the mechanism of open market operation and increase financial support for the economy.
The seven-day rate is seen as a future benchmark interest rate, with the People’s Bank of China signaling in recent weeks a shift toward the shorter-term rate to guide markets. That would reduce the importance of the current one-year benchmark, known as the medium-term lending rate.
The People's Bank of China last cut the seven-day benchmark interest rate in August, along with the multilateral fund rate by 10 basis points.
Since then, pressures from currency depreciation have limited the central bank's room to cut interest rates.
The move comes ahead of the announcement of banks' benchmark lending rate, or key lending rate, on Monday morning.
