China cuts rates unexpectedly to support economy

The news: China's central bank has unexpectedly cut key policy rates for the second time in three months on Tuesday, as authorities try to bolster a sputtering economic recovery.

The numbers: The People's Bank of China (PBOC) lowered the rate on 401 billion yuan ($85.25 billion) worth of one-year medium-term lending facility (MLF) loans to some financial institutions by 15 basis points to 2.50%. It also injected 204 billion yuan through seven-day reverse repos while cutting borrowing costs by 10 basis points to 1.80%.

The context: The monetary easing measures have been necessitated by falling credit growth and rising deflation risks, even as default risks at some housing developers and missed payments by a private wealth manager have also affected financial market confidence. China remains an outlier among global central banks as it has loosened monetary policy to shore up a stalling recovery whereas others have been in tightening cycles as they battle high inflation.

What they're saying: "All of these add to the urgency that policymakers need to act fast before consumer and business confidence deteriorate sharply," Tommy Wu, senior China economist at Commerzbank told Reuters.