PBOC Takes a Knife to Interest Rates as Economic Headwinds Grow

Yields on benchmark Chinese government bonds recovered Tuesday after slumping to their lowest in almost two years the previous day when the central bank cut the interest rate on a key money-market instrument in its latest move to support the slowing economy.

The People’s Bank of China (PBOC) lowered funding costs Monday for 14-day reverse repurchase (repo) agreements by 10 basis points, or 0.1 of a percentage point, to 2.25% after last week reducing several key policy loan rates. The yield on the benchmark 10-year government bonds declined that day to close at 2.6775%, its lowest since May 2020, and recovered to 2.6975% Tuesday, according to data compiled by Bloomberg.