China cuts its seven-day reverse repurchase rate – a key liquidity tool – for the first time in more than four years in a signal of market support.

The People’s Bank of China cut its seven-day reverse repurchase rate from 2.55 percent to 2.50 percent, its website said. New loosening follows the PBoC’s cut of its medium-term lending facility (MLF) loans two weeks ago – the first since 2016.

The reverse repo rate cut signals government support for the market amid not only a slowdown but worries that additional liquidity would not be released due to inflationary risks. Consumer inflation has reached an 8-year high, outpacing the government’s 3 percent target in October, best illustrated by soaring pork prices fuelled by the speed of African Swine Fever.

The PBoC resumed reverse repo operations after a 15-day break, injecting 180 billion yuan ($26 billion) into the interbank market. It will announce the newly established loan primate rate (LPR) on Wednesday, which is expected to follow in line with the two recent rate cuts.