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PBOC Cut Does Not Promote Long-end Yield Decline

CHINA PRESS

The PBOC’s decision to cut the 7-day reverse repurchase rate by 10 basis points aims to support the real economy without promoting a further decline in long-term bond yields, persons close to the PBOC have told the Securities Times. Authoritative experts said the real economy will gradually benefit from lower policy interest rates, reducing comprehensive financing costs and breaking the negative cycle between falling long-term bond yields and weakening economic expectations. The PBOC’s move increases countercyclical regulation, while medium and long-end bond yields reflect long-term trends over a cross-cycle perspective, the experts added.

MNI Beijing Bureau | lewis.porylo@marketnews.com

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