(Yicai Global) Jan. 24 -- The People’s Bank of China has slashed the cost of borrowing with 14-day reverse repos and injected CNY150 billion (USD23.7 billion) into the market via the monetary tool to maintain stable liquidity during the upcoming week-long Chinese New Year break, the central bank said today.

The rate on two-week reverse repos has been lowered by 10 basis points to 2.25 percent, it said. Short-term liquidity needs usually increase during the Spring Festival holiday, which will begin on Jan. 31 this year.

In the past week, the PBOC has cut rates on a series of lending instruments as part of a new round of monetary easing to underpin a slowing economy. The one-year medium-term lending facility and the seven-day reverse repo were lowered by 10 basis points on Jan. 17. The one-year and five-year benchmark loan prime rates were slashed by 10 bps and five bps respectively on Jan. 20.

And the standard lending facility, a liquidity adjustment tool introduced in 2013 to satisfy the short-term borrowing needs of financial institutions, was trimmed on Jan. 21. The overnight SLF rate was lowered 10 bps to 2.95 percent, and the seven-day rate and one-month rate reduced 10 bps to 3.10 percent and 3.45 percent, respectively.

The series of cuts within the space of seven days imply the downward pressure on the economy is still heavy, an industry insider told Yicai Global.

The most crucial interest rates in China's market-oriented system are the open market operation rate and rate corridor, the MLF, LPR , reverse requirement ratio and the Shanghai Interbank Offered Rate, PBOC Governor Yi Gang said earlier. Short-term interest rates can only fluctuate within a reasonable range with the SLF rate as the ceiling and the excessive reserves rate as the floor.

Editor: Kim Taylor