The Chinese Central Bank announced interest rate cuts and a major liquidity injection on Wednesday.
The rate cuts are part of stimulus measures rolled out by the Chinese authorities amid tariffs war between China and United States.
The latest moves come as Beijing steps up efforts to soften the economic damage caused by the trade war ignited by US President Donald Trump’s administration.
The monetary measures announcements come shortly after US and Chinese officials said Treasury Secretary Scott Bessent and chief trade negotiator Jamieson Greer will meet China’s top economic official, He Lifeng, in Switzerland this weekend for talks.
The development saw Chinese stocks rise as investors cheered the easing steps and the icebreaker trade talks.
Details of monetary measures showed that China’s central bank will lower the borrowing cost of its seven-day reverse repurchase agreements, its benchmark interest rate, by 10 basis points to 1.40 percent, effective May 8. Other interest rates will drop in line with the key rate.
The amount of cash that banks must hold as reserves, known as the reserve requirement ratio (RRR), will also be cut by 50 bps from May 15, bringing the average level to 6.2 percent.
The People’s Bank of China’s (PBOC) Governor Pan Gongsheng told a press conference on Wednesday that this is the first RRR cut since September last year and will release 1 trillion yuan ($138 billion) in liquidity.
Meanwhile, the US Federal Reserve, chaired by Jerome Powell, planned to meet on Wednesday to make a decision on the country’s interest rate amid pressure by President Trump to cut the rate.
