China cut its key interest rate for the first time in 10 months as the economic recovery slowed

China’s central bank cut rates on medium-term lending on Thursday, in a much-anticipated move as the economy’s post-Covid recovery continues to lose momentum.

The People’s Bank of China cut the interest rate on 237 billion yuan ($33 billion) of medium-term lending facility (MLF) loans to some financial institutions by 10 basis points – from 2.75% to 2.65%.

The last time the central bank cut its rate on 400 billion yuan of one-year Multilateral Fund loans in Augustmaking Thursday’s move the first in 10 months.

China Medium Term Lending Facility is a financing channel introduced to allow the central bank to inject liquidity into the banking system and influence interest rates for certain loans.

Earlier this week, the central bank cut the seven-day reverse repo rate by 10 basis points from 2% to 1.9%, and injected RMB2 billion through seven-day repo agreements. China’s largest state-owned commercial bank cut deposit rates last week, according to CNBC’s checks.

Shortly after the announcement, the dollar rose 0.2% against the onshore Chinese yuan to 7.1744 – its lowest since November.

The Shanghai Composite was 0.3% higher while the Shenzhen Composite was flat. Hong Kong’s Hang Seng rose 1.3% and Hang Seng Tech jumped more than 2%.

Brendan Ahern, chief investment officer at KraneShares, said the central bank’s MLF cut is a sign of Chinese policymakers’ “willingness” to step in to help support the economy.

“They indicate their awareness and willingness to support the economy, it is [a] Recognizing that the post-COVID recovery is happening at a very tepid or increasing pace”

He added that the loan base interest rate decision, due on June 20, is also expected to lead to a cut as the government embarks on further support measures to boost demand.