CHINESE money and debt rates fell slightly yesterday after the central bank cut interest rates, but the decline was milder than expected, highlighting the difficulty the government has getting its adjustments to benchmarks reflected in real lending rates.

    The weighted average of the benchmark seven-day bond repurchase agreement was quoted at 4.7 percent, down only 12 basis points from the previous close. The one-day rate dropped 9 basis points to 3.42 percent.

    China’s benchmark loan prime rate, an official figure calculated from contributions from nine major commercial banks, slid 21 basis points yesterday from Friday, but that fall was still less than the central bank’s 25-basis-point cut in its official one-year lending rate.

    The People’s Bank of China (PBOC) cut official interest rates Saturday, just days before the annual meeting of the country’s parliament, the latest effort to support the economy as its momentum slows.

    However, past cuts have so far had little impact on real lending rates, economists say, with many arguing it will take bolder action to achieve lower borrowing costs.

    “The immediate effect on market rates appears relatively mild as the rate cut was widely expected,” said a trader at a Chinese bank in Shanghai.

    “It also implies a progressive reduction of the effect of monetary easing steps,” he said.

    Analysts, however, see long-term positive impact on China’s corporate funding costs, because it usually takes time for lower rates to transmit.

    “This is bullish for China corporate borrowers because over time it will lower interest costs,” said Viktor Hjort, head of Morgan Stanley’s Asia Fixed Income Research. “There are already some signs cheaper funding costs are filtering through to the weaker parts of the economy,” he said. “It is different from the easing of 2009, 2011-2012 in that policymakers are deliberately behind the curve compared with the economic deterioration.”

    In other market reaction, China’s yuan fell to its lowest level against the U.S. dollar since October 2012 yesterday, and to within a hair’s breadth of the lower limit of its daily trading range.

    China stocks posted only modest gains, with some investors expressing disappointment that the central bank didn’t cut rates more deeply. By comparison, the PBOC’s rate cut in late November, the first in more than two years, triggered a 26 percent surge in Chinese shares over the following month. (SD-Agencies)