China’s central bank unexpectedly lowered the key interest rate to the highest level since 2020 in order to support the economy, which has been facing new risks due to a downturn in the real estate market and reduced consumer spending.
The People’s Bank of China reduced the rate on annual loans by 15 basis points to 2.5%, marking the second reduction since June. This move affected government bonds and the exchange rate. Specifically, the yield on China’s 10-year bonds dropped to 2.56%, the lowest level since 2020. The yuan’s exchange rate also weakened by 0.23%.
China’s economic challenges are causing concerns worldwide. Experts anticipate that the People’s Bank of China will take additional measures to support the economy, including reducing the required reserve ratio for banks.
