China unexpectedly cuts interest rates to support COVID-hit economy

ANKARA

The People’s Bank of China (PBOC) on Monday lowered its key interest rates for the first time since January to boost support for the economy affected by COVID-19 lockdowns and a property downturn.

The bank lowered medium-term lending rate by 10 basis points to 2.75% from 2.85%, according to a statement from the PBOC.

It also reduced the seven-day reverse repo rate to 2% from 2.1%, injecting 2 billion yuan (some $300 million) into the banking system.

The bank had cut both rates by 10 basis points in January.

Meanwhile, the world's second-largest economy saw slower-than-expected industrial production and retail sales growth, suggesting the zero-COVID policy continues to weaken consumer demand.

China's industrial production grew 3.8% year-on-year in July, weaker than market estimate of 4.6%, the National Bureau of Statistics said.

The retail trade increased 2.7% from a year ago in July, missing economists’ forecast of a 5% rise.