China’s central bank cuts two key policy rates

China’s central bank on Tuesday cut two key policy rates, signaling that the country’s benchmark lending rates will fall later this month.

The People’s Bank of China injected 401 billion yuan ($55.24 billion) of liquidity via the one-year medium-term lending facility at an interest rate of 2.50%, down from the previous 2.65%. It also provided CNY204 billion of funds through seven-day reverse repurchase agreements at an interest rate of 1.90%, down from 1.80% previously.

The PBOC had cut both rates by 10 basis points in June, which later guided the benchmark loan rates lower.

Tuesday’s moves come as Beijing grapples with a sputtering economy, prompting calls for major policy support to kickstart growth.

Economists warn that any interest-rate cuts would widen the yield gap with the U.S., further pressuring yuan.

A senior official from China’s central bank said earlier that monetary-policy tools–including reserve requirement ratio cuts, open-market operations and medium-term lending facilities–would be used flexibly to keep liquidity ample in the country’s banking system.

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