Borrowing cost in China rising before latest rate cut: central bank

BEIJING (Reuters) - China’s twin cuts in its interest rates and reserve requirement ratio (RRR) on Tuesday should help it to better implement prudent monetary policy, a senior central bank official said.

Lu Lei, the head of the research office at the People’s Bank of China, said the borrowing cost for Chinese companies was still rising after adjusting for inflation, and Tuesday’s 25-basis-point cut in interest rates should temper that.

He told reporters the recent moves in the yuan CNY=CFXS had also affected liquidity levels in the Chinese financial system. Tuesday's reduction in the RRR should help financial institutions to overcome volatile liquidity conditions.

Reporting by Clark Li and Koh Gui Qing; Editing by Angus MacSwan