China central bank cuts one-year MLF rate by 10 basis points to support virus-hit economy

SHANGHAI (Reuters) – China’s central bank cut the interest rate on its medium term loans on Monday as policymakers try to reduce the economic shock from a coronavirus outbreak that is severely disrupting business activity.

The People’s Bank of China (PBOC) said it was lowering the rate on 200 billion yuan ($28.65 billion) worth of one-year medium-term lending facility (MLF) loans to financial institutions by 10 basis points (bps) to 3.15% from 3.25% previously.

No MLF loans had been set to mature on Monday.

Earlier this month, as the virus outbreak escalated, the PBOC unexpectedly lowered the interest rates on reverse repurchase agreements by 10 bps.

Monday’s move is expected to pave the way for a cut in the country’s benchmark loan prime rate (LPR), which will be announced on Thursday.

The PBOC also said in the statement that it injected 100 billion yuan of reverse repos to financial institutions on Monday, when a total of one trillion yuan worth of reverse repos are due to expire.

(Reporting by Winni Zhou and Se Young Lee; Editing by Kim Coghill)