China's central bank cut its short-term lending benchmark on Monday and injected Rmb50bn ($7.1bn) into the financial system as the country grappled with the prospect of sharply slower growth due to the coronavirus pandemic.

The People's Bank of China cut the seven-day reverse repo rate used to manage short-term liquidity by 0.2 percentage points, taking it to 2.2 per cent. Lowering the rate, which sets the cost of seven-day lending from the central bank, is a far less substantial easing measure than a cut to the central bank's main policy lever — the medium-term lending facility rate.

But the move, which came alongside an injection of about $7bn through seven-day reverse repos, will pull down the cost of short-term loans and boosts interbank liquidity, providing some relief from tight funding conditions.