Without giving a reason for the move, the People's Bank of China said on its website that it was lowering the 7-day reverse repo rate to 2.20% from 2.40%, the lowest on record. This was the first rate cut since a 10bps cut in December 2019, and the third cut in the 7-day rate since November.

"The larger-than-usual rate cut is an expression that China is willing to join the coordinated consortium for economic stabilization," said Raymond Yeung, chief China economist at Australia & New Zealand Banking Group in Hong Kong as quoted by Bloomberg. "Small and medium-sized businesses are collapsing for lack of cash flow."

Also on Monday, the PBOC injected 50 billion yuan ($7 billion) into money markets through seven-day reverse repos, breaking a hiatus of 29 trading days with no fresh fund injections via the liquidity tool.