MNI: PBOC Cuts MLF, Reverse Repo Rates By 10 Bps Apiece

The People's Bank of China (PBOC) unexpectedly lowered two key policy interest rates on Monday, after total social financing fell to a six-year low in July. The easing of the MLF and 7-day reverse repo rates represented the first such cuts since January of this year.

The PBOC cut the rate applied to the one-year medium-term lending facility by 10 bps to 2.75%, while it injected CNY400 billion in gross liquidity via the instrument. Meanwhile, it also lowered the rate applied to 7-day reverse repos by 10 bps to 2.00% while injecting CNY2 billion in gross liquidity via the instrument. This resulted in a net drain of CNY200 billion given today's maturity of CNY600 billion of MLFs and CNY2 billion of reverse repos, according to Wind Information.

• The operations aim to keep liquidity reasonable and ample, the PBOC said on its website.
• The 7-day weighted average interbank repo rate for depository institutions (DR007) rose to 1.6395% at 9:51 am local time from the close of 1.3486% on Friday.
• The CFETS-NEX money-market sentiment index closed at 42 on Friday vs 40 on Thursday.