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China’s rate cut is on the table before the end of the year


State of play with the central bank of China

China left its prime lending rate unchanged at 3.85% for one year and 4.65% for five years in a decision taken early today. It wasn’t a surprise.

There is growing speculation that the PBOC will cut rates before the end of the year, albeit likely in the reserve requirement ratio (RRR) instead.

The Global Times wrote about the likelihood of a cut today without giving a clue as to what will happen.

Xi Junyang, a professor at the Shanghai University of Finance and Economics, said the central bank would likely reduce the RRR, the amount of cash that banks and financial institutions must hold in reserve, by 25 basis points. before the end of this year.

However, other analysts cited in the article disagreed, so there is likely no signal in the state-sponsored publication.

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