China’s central bank has taken significant steps to support the economy by reducing a key short-term interest rate and injecting substantial liquidity into the financial system.

What Happened: The People’s Bank of China cut the 14-day reverse repurchase interest rate by 10 basis points to 1.85% and injected 74.5 billion yuan ($10.6 billion) of liquidity via this policy tool, according to its website.

Additionally, the central bank injected 160.1 billion yuan ( $10.6 billion) through 7-day reverse repo agreements, maintaining the interest rate at 1.7%, the bank stated on Monday.

Last week, the PBOC unexpectedly kept its benchmark lending rates steady, despite rising expectations for easing following the U.S. Federal Reserve’s rate cut.

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Why It Matters: The recent actions by the People’s Bank of China come amid a global trend of monetary policy adjustments. On Thursday, the Bank of Japan opted to maintain its benchmark interest rate at 0.25%, diverging from the U.S. Federal Reserve’s 50 basis point cut.

On Friday, a portfolio manager noted that the Federal Reserve’s rate cut could drive investors away from money market funds and into longer duration bonds.

Additionally, Federal Reserve Governor Michelle W. Bowman defended her decision to support a smaller 25-basis-point rate cut, citing ongoing inflation concerns. This marked a historic moment as it was the first time since 2005 that a Fed governor openly disagreed with a rate decision.

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This story was generated using Benzinga Neuro and edited by Kaustubh Bagalkote