INSUBCONTINENT EXCLUSIVE:
China kept its lending benchmark rate unchanged on Friday, but markets widely expect further monetary easing in 2020 to arrest an economic
near 30-year lows in the third quarter and speculation is mounting that Beijing needs to roll out stimulus more quickly and more
aggressively.
The one-year loan prime rate (LPR) was unchanged at 4.15 per cent from the previous monthly fixing
The five-year also remained the same at 4.80 per cent.
A Reuters snap survey published on Thursday showed that near 74 per cent of all 53
bank conducted medium-term lending facility operations twice this month, injecting a total of 600 billion yuan ($85.61 billion) into the
banking system, exceeding 473.5 billion yuan
longer-term liquidity in the banking system, now serves as a guide for the new LPR.
NOT A PANACEAThe government has pledged to lower
borrowing costs for smaller businesses to support the real economy, but Serena Zhou, economist at Mizuho Securities in Hong Kong argued that
basis points during the first three quarters this year
she still believes the central bank will continue to adopt a relatively accommodative monetary policy stance next year, and looks for
reserve requirement ratio (RRR) cuts of 100 basis points and MLF cuts of 10 basis points.
Cuts to the amount of cash banks must hold in
reserves could come as early as January given that a liquidity shortfall of up to 2.8 trillion yuan is expected to emerge during the Lunar
still intensifying and economic activity likely to cool further in the first half of 2020, we think the PBOC will step up the pace of rate
The PBOC revamped the mechanism to price LPR in August, loosely pegging it to the medium-term lending facility rate.
