(Bloomberg) -- China's central bank is set to cut the interest rates of some of its lending programs from Wednesday to lower the borrowing costs of small businesses, according to people familiar with the matter.
The People's Bank of China will cut the interest rates of both its relending and rediscounting programs for small firms and agriculture-related firms, the people said, asking not to be named as they're not authorized to speak on the matter. The news was earlier reported by Securities Times. The cut is effective July 1.
The PBOC has relied heavily on its relending program this year to direct funding to targeted sectors without flooding the economy with liquidity. The program provides cheap base money to banks on the condition they use it lend to specific sectors.
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The PBOC has pledged to offer 1.8 trillion yuan ($254 billion) of relending loans this year, as well as another 440 billion yuan in loans used to purchase un-collateralized loans to small businesses to help boost credit.
Details of Cuts
- Relending rates:
- 1-year rate cut to 2.25% from 2.5%
- 6-month rate cut to 2.15% from 2.4%
- 3-month rate cut to 1.95% from 2.20%
- Rediscounting rate cut to 2% from 2.25%
- Financial stability relending program rate cut to 1.75%
The PBOC didn't immediately respond to faxed questions out of normal office hours.
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