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No relaxation on the PBOC interest rate / speculation on the reduction of the RRR

Yesterday we got the monthly loan rate from the People’s Bank of China

  • Unchanged for the 19th consecutive month.

This sparked a flurry of advice on what the PBOC could do next, starting Monday UST:

And now, this morning, Chinese media – Economic Information Daily claims that the PBOC is unlikely to cut the MLF rate this year. Which makes sense, time is running out!

Meanwhile, referring to the People’s Bank of China latest quarterly report on monetary policy:

  • the report omitted a reference to how the central bank would not engage in a large-scale flood-like stimulus

Response from:

  • Nomura: “In our opinion, these cuts represent an official change in PBoC policy and pave the way for more decisive monetary and credit easing”
  • Macquarie: “This time the deletion of the sentence paves the way for an acceleration of monetary easing”

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