In an 'unexpected' move, the People's Bank of China (PBoC) has slashed the interest rate on its one-year medium-term lending facility from 2.5% to 2.3%, injecting 200 billion yuan ($25.4 billion) into the market. This decision, announced Thursday, follows a recent cut in the short-term lending rate, aiming to bolster China's struggling economy.
Earlier this week, the PBoC lowered the seven-day reverse repo rate from 1.80% to 1.70%, stating its intention to "enhance financial support for the real economy." Consequently, Chinese banks reduced their one-year and five-year loan prime rates by 10 basis points to 3.35% and 3.85%, respectively.
The central bank's rapid rate cuts reflect a shift from tightening to easing monetary policy, indicating significant concerns about economic stability. It is very interesting to see that within this clown fiat world the gain of knowledge is zero. Centralization of monetary policy, which inevitably leads to misjudgements and boom-bust cycles, is not dropped, any evolution in economic thinking and application design is denied.