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Despite the ongoing shutdowns, the Chinese economy continues to collapse

Despite the ongoing shutdowns, the Chinese economy continues to collapse

China’s central bank has chosen to remain unchanged despite the fact that Beijing and Shanghai are also struggling with an increase in the number of people infected with the coronavirus, in the form of bribes.

The People’s Bank of China said it will keep the interest rate on its one-year medium-term loan unchanged at 2.85 percent. CNBC In his account of what it is MTI Examined.

The Far Eastern country is facing the worst Covid epidemic since the start of the epidemic in late 2019 as it shut down major cities such as Shanghai. The mass shutdowns have sparked expectations that GDP growth will fall below the government’s 5.5 percent target this year, leading some economists and analysts to anticipate rate cuts.

“The People’s Bank (PBOC) today waived the option to cut key interest rates. This is somewhat surprising given the severe economic contraction and recent calls from the Chinese leadership for monetary support.” Said Julian Evans-Pritchard, chief economist at Capital Economics in China.

“Most analysts, including us, expected a drop” – Tell.

Ahead of Friday’s surprise decision, investment firm KraneShares wrote in an overnight note that Chinese stocks rose on Thursday on hopes that China’s central bank would cut medium-term credit line as well as bank reserve ratios and key rates on loans.

The People’s Bank of China (PBOC) on Friday injected 150 billion yuan into the financial system as part of its medium-term credit (MLF) program.

The central bank said the interest rate on one-year loans issued under the multilateral fund remained at 2.85 percent annually.

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The People’s Bank of China also provided 10 billion yuan to banks in reverse repo operations for seven days, and the interest rate on these operations remained unchanged at 2.1 percent.

Experts expected the People’s Bank of China to cut interest rates on the Multilateral Fund and reverse repurchase rates to provide additional support to the economy. However, failure to do so increases the possibility that banks will be allowed to reduce required reserve ratios, which could free up billions of dollars of liquidity.

Earlier this week, Chinese Premier Li Kuoqiang said Beijing intends to use the bank’s required reserve ratio cut, along with other monetary policy tools, to support the economy and business.

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