China lowers short-term borrowing costs as the economy slows

China’s central bank on Tuesday cut interest for short-term lending for the first time in 10 months, in an effort to restore market confidence and support a stalled recovery from the pandemic in the world’s second-largest economy.

This may mean the possibility of taking urgent stimulus measures to support growth.

According to “Reuters”, the People’s Bank of China cut its interest for a seven-day reverse repo by ten basis points to 1.90 percent from 2.00 percent on Tuesday, and injected two billion yuan ($279.97 million) through the short-term bond instrument.

The yuan reached its lowest level in six months at 7.1680 per dollar after the interest rate decision

China continues to buck global central banks as it pursues accommodative monetary policies to support growth while its major peers raise interest rates to curb rising consumer prices.

Traders and analysts said Tuesday’s rate cut indicated policymakers were increasingly concerned about the strength of China’s recovery.