China unexpectedly cuts reverse repo rate by most in five years to support virus-hit economy

China unexpectedly cuts reverse repo rate by most in five years to support virus-hit economy

China’s central bank unexpectedly cut the rate on reverse repurchase agreements by 20 basis points on Monday, the largest in nearly five years, as authorities ramped up steps to relieve pressure on an economy ravaged by the coronavirus pandemic, Trend reports with reference to Reuters.

The People’s Bank of China (PBOC) announced on its website that it was lowering the 7-day reverse repo rate CN7DRRP=PBOC to 2.20% from 2.40%, but it did not give a reason for the move.

Ma Jun, a central bank adviser told state media that China still has ample room for monetary policy adjustment and the rate decision took into consideration the return of Chinese companies to work, the global virus situation and a deterioration in the external economic environment.

It was the third cut in the 7-day rate since November, and comes as the coronavirus infections in China - where the outbreak originated late last year - has slowed from a peak in February. The country has so far reported 3,304 deaths from 81,470 infections.

In a note to clients, Capital Economics said “a lot more easing will be needed, especially on the fiscal front, to help the economy return to its pre-virus trend.”

Global policymakers have rolled out unprecedented stimulus measures in the past few weeks, cutting rates sharply and injecting trillions of dollars to backstop their economies as many countries have been put under tight lockdowns to contain the pandemic.

Yan Se, chief economist at Founder Securities in Beijing, said the rate cut was China’s commitment to a pledge it made during the Group of 20 major economies meeting last week to combat the coronavirus and stabilize financial markets.

“China was the only major economy that had not yet implemented large-scale easing measures” Yan said, noting that many other nations have implemented more drastic steps such as quantitative easing and deeper cuts to benchmark rates.

Leaders of the G20 pledged on Thursday to inject over $5 trillion into the global economy to limit job and income losses from the coronavirus, which has so far infected more than 700,000 people and killed nearly 34,000 worldwide.

Earlier in the day, the PBOC injected 50 billion yuan ($7 billion) into money markets through seven-day reverse repos, breaking a hiatus of 29 trading days with no fresh fund injections.

Chinese 10-year government bond futures initially responded positively to the cut, with the most-traded contract for June delivery CFTM0 rising as much as 0.23%, before pulling back to last trade down 0.1%.

Xing Zhaopeng, markets economist at ANZ in Shanghai, said the latest cut follows the ruling Communist Party’s Politburo meeting last Friday.

“The medium-term lending facility (MLF) rate and Loan Prime Rate (LPR) will be cut at the same pace this month. We believe this cut is a signal to urge all loans to refer LPR as the benchmark so that the PBOC can improve the effectiveness of monetary policy transmission,” he said.

At Friday’s meeting, the politburo said the government will step up policy measures and tighten enforcement in a bid to achieve full-year economic and social development targets.

The coronavirus hit the Chinese economy just as it was starting to show some signs of stabilizing after growth cooled last year to its slowest pace in nearly 30 years amid a trade war with the United States.

Analysts expect China’s economy to contract sharply in the first quarter due to widespread disruptions to business and consumer activity caused by the virus as authorities put in place tough public measures to contain the pandemic.

Nomura has lowered its annual GDP growth forecast for China to 1.0% this year, from 1.5% previously, and adjusted quarterly GDP forecasts to a 9.0% annual contraction, from an earlier prediction of 0.9% contraction.

Chamber of Commerce talks Iranian-Tajik trade amid COVID-19
Chamber of Commerce talks Iranian-Tajik trade amid COVID-19
Uzbekistan becomes one of Tajikistan's top donor countries
Uzbekistan becomes one of Tajikistan's top donor countries
Tajikistan sends construction materials to Uzbekistan
Tajikistan sends construction materials to Uzbekistan
Loading Bars
Latest
President Ilham Aliyev, First Lady Mehriban Aliyeva view restoration and conservation works at Pir Omar Sultan shrine in Shamakhi (PHOTO/VİDEO)
President Ilham Aliyev, First Lady Mehriban Aliyeva attend opening of orphanage-kindergarten No2 constructed on initiative of Heydar Aliyev Foundation in Shamakhi (PHOTO/VİDEO)
President Ilham Aliyev, First Lady Mehriban Aliyeva view conditions created at multi-apartment buildings constructed in Shamakhi (PHOTO/VİDEO)
President Ilham Aliyev, First Lady Mehriban Aliyeva view transport vehicles and special machinery allocated to Shamakhi district (PHOTO/VİDEO)
No alternative to renewable energy
Former UK PM Tony Blair questions Trump's leadership in coronavirus pandemic
Bosnian Premier League among worst in world for coach stability: survey
Philippines posts five new coronavirus deaths, 284 infections
Azerbaijan's E-PUL payment system grows user base, prepares new project
Azerbaijani Compulsory Insurance Bureau talks priorities in insurance market
Azerbaijani president, first lady view renovation work done on Pirsaat Baba shrine in Shamakhi (PHOTO)
Official talks latest status of Iran-India contract on Chabahar port
Iran expects domestic wheat production to reach 14 million tons
Iran to sell debt securities, to make up for budget deficit
Azerbaijan detects 149 new COVID-19 cases
Production of shoes surges in Azerbaijan
BSTDB, Development Bank of Austria to finance SMEs in Azerbaijan
Azerbaijani President Ilham Aliyev, First Lady Mehriban Aliyeva arrive in Shamakhi district (PHOTO)
TAP updates on compressor and metering stations
TAP: Offshore section not fully completed yet
Azerbaijan’s Finex Kredit talks about expansion of lending in agriculture
Kazakhstan cuts time on issuing certificates on import of perishable goods
Kazakhstan reveals state-backed funding measures for SMEs
Chairman of Kazakhstan’s Nuclear and Energy Supervision Committee appointed
Kazakhstan's Altynalmas starts commissioning its new gold recovery plant
National Iranian Oil Company reveals its debts to banks
Azerbaijani president congratulates Georgian president
Kazakh Tengizchevroil evacuates employees from field to prevent COVID-19 spread
Azerbaijani Agricultural Insurance Fund talks about shares of companies
Kazakhstan's Mangystaumunaigas oil&gas company reports net income decrease
Kazakhstan sets ceiling retail prices on commercial gas
Turkmenistan to establish Reserve Currency Fund
Geostat: Number of Georgian travelers taking trips abroad declines
Enhancing Ramsar Airport now allows Iran to receive bigger aircraft
Average monthly income up in Georgia
Iran to commission over 20 airport infrastructure facilities
Iran reveals its COVID-19 statistics for May 25
Indonesia reports 479 new coronavirus cases
Spain to welcome foreign tourists back from July
Malaysia reports 172 new coronavirus cases, most of them foreigners
Expert talks about ways to develop e-commerce in Azerbaijan
Iran sees 'no problem' with launching gas exports to Syria - minister
Georgia's COVID-19 cases climb to 731
Over 12K Georgian citizens brought home since COVID-19 outbreak
Iran hints at stopping export of gas condensate
Turkmenistan to receive loan from OPEC to support local businesses
Uzbekistan increases heat energy production
China supplies innovative drip irrigation technology to Uzbekistan
Uzbekistan increasing fuel production
Turkish president makes phone call to Azerbaijani president
TAV Airports look to turn Kazakhstan's Almaty into regional cargo hub
Turkmenistan, Turkey lay emphasis on co-op in trade, humanitarian sectors
Oil prices not to recover to pre-coronavirus levels as quickly as they fell
Kazakh national postal service operator to buy liquefied gas via tender
Uzbekistan lifts some restrictions to boost construction work countrywide
Azerbaijani oil prices for May 18-22
Iran's Khatunabad copper smelter’s production increases
Kazakhstan sees positive signs with its trade volume with Europe
Iran partially pays subsidies to construction company as part of Mehr Housing Project
Kazakhstan closes off Karachaganak field as COVID-19 cases reported
Iran- Iraq trade via Parviz Khan customs checkpoint resumes
MFA: Armenian PM’s congratulations on occasion of Ramadan - highest level of hypocrisy
COVID-19 cases in Uzbekistan increase to 3,180
FM: Azerbaijan, Turkey - together in joy and sorrow
Cement exports from Turkey to Kyrgyzstan fall sharply
Iran's watermelon exporters in Turkey face dilemma, as business suffers
Iran's foreign currency policy slows down exports
Kazakhstan’s oil producing company to buy pipes via tender
Armenia violates ceasefire with Azerbaijan 23 times
Iran Khodro breaks production record despite COVID-19 pandemic
Georgian banks' net profit up
Aston Martin chief to leave, Mercedes-AMG CEO to replace him
Iran allows high-risk businesses to re-open, with new health rules in place
Chamber of Commerce talks Iranian-Tajik trade amid COVID-19
Onshore oil, gas and condensate fields in Azerbaijan
Iran warns of health protocol as COVID-19 cases soar in some provinces
TANAP consortium talks on creation of operator company
Thailand reports 2 new coronavirus cases, 1 more death
Kyrgyzstan reports 30 new COVID - 19 cases, 1433 in total
Armenia ranks 6th with number of daily confirmed COVID-19 cases per million people
Number of COVID-19 cases surpasses 8,500 in Kazakhstan
BSTDB President: Azerbaijan has substantial buffers to mitigate COVID-19 impact on economy
Syrian troops destroy terrorist unit in southwest of Raqqa province
Chinese mainland reports no new domestically transmitted COVID-19 cases
S. Korea reports 16 more cases of new coronavirus, total at 11,206
U.S. COVID-19 death toll nears 100,000, New York Times calls it "incalculable loss"
White House limits travel to U.S. from Brazil due to coronavirus
Italy's COVID-19 death toll rises by 50 to 32,785
Coronavirus could cost Mexico a million jobs: president
UK COVID-19 deaths rise to 36,793 as another 118 patients die
Israel reports no COVID-19 death cases for 4 consecutive days
5.8-magnitude quake jolts Wellington, New Zealand
Spain's coronavirus death toll rises to 28,752
British PM Boris Johnson defends adviser over apparent breach of lockdown rules
India domestic flights to resume, but coronavirus cases rise
Singapore reports 548 COVID-19 cases
Oil demand projected to drop by more than 10% for 2020
Number of COVID-2019 cases across globe up by over 101,000 in past day - WHO
First Vice-President Mehriban Aliyeva extends Ramadan congratulations to the people of Azerbaijan (PHOTO)
Azerbaijani, Turkish FMs hold phone conversation
All news