On Wednesday the People’s Bank of China moved to ease the economy further signaling it will inject 140 billion yuan ($21.80 billion) into the financial system through a short-term liquidity adjustment (SLO) operation.
The SLO loans come with a 2.3% interest rate. This kind of operations was implemented by the PBOC in 2013 to lower
fluctuations in liquidity and stabilize interbank funding costs.
Wednesday’s move comes a day after the Chinese central bank cut its
benchmark interest rates and lowered the reserve-requirement ratio for
banks in the aftermath of recent stock-market rout in the country.
So far, the recently taken measures failed to significantly help the Chinese equity market, with the Shanghai Composite Index closing 1.28% lower.
