China cbank unexpectedly cuts reverse repo rates to help economy as virus spreads

China's central bank unexpectedly lowered the interest rates on reverse repurchase agreements by 10 basis points on Monday, as authorities stepped up measures to relieve pressure on the economy from a rapidly spreading virus outbreak. The People's Bank of China (PBOC) said on its website that it was lowering the 7-day reverse repo rate to 2.40% from 2.50%, and cutting the 14-day tenor to 2.55% from 2.65% previously.

The cut came as Chinese financial markets reopened after an extended Lunar New Year holiday, when the death toll from the virus and number of infections had climbed sharply. On Monday, the PBOC also injected a total of 1.2 trillion yuan ($173.81 billion) into money markets through reverse bond repurchase agreements. Markets had widely expected the liquidity move but most analysts thought rate cuts might follow later once the economic impact was more clear. ($1 = 6.9040 Chinese yuan)

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