China Shifts to Overnight Policy Rate to Lower Funding Costs
China's central bank has set up an overnight lending rate, a major change to how it manages monetary policy. The move injects a large amount of cash into the banking system, aimed at easing borrowing costs for financial institutions and supporting economic growth.
Context
Context: Central banks use a policy rate as a main lever to steer borrowing costs and cash flow through the economy. Overnight rates are the shortest-term benchmark, so they quickly shape what banks pay each other and, in turn, loans.
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