China central bank unexpectedly cuts reverse repo rates to help economy as virus spreads

FILE PHOTO: A woman walks past the headquarters of the People's Bank of China (PBOC), the central bank, in Beijing, China September 28, 2018. REUTERS/Jason Lee/File Photo

SHANGHAI (Reuters) - China’s central bank unexpectedly lowered the interest rates on reverse repurchase agreements by 10 basis points on Monday, as authorities stepped up measures to relieve pressure on the economy from a rapidly spreading virus outbreak.

The People's Bank of China (PBOC) said on its website that it was lowering the 7-day reverse repo rate CN7DRP=CFXS to 2.40% from 2.50%, and cutting the 14-day tenor CN14DRP=CFXS to 2.55% from 2.65% previously.

The cut came as Chinese financial markets reopened after an extended Lunar New Year holiday, when the death toll from the virus and number of infections had climbed sharply.

On Monday, the PBOC also injected a total of 1.2 trillion yuan ($173.81 billion) into money markets through reverse bond repurchase agreements. Markets had widely expected the liquidity move but most analysts thought rate cuts might follow later once the economic impact was more clear.

Reporting by Winni Zhou in Shanghai and Se Young Lee in Beijing; Editing by Kim Coghill