China: Other rate cuts to follow the MLF cut – ANZ

According to analysts at ANZ, the 5bp cut in the MLF rate today from PBoC will likely lead to similar adjustments in the reverse repo rate and the loan prime rate (LPR).

Key Quotes

“We also expect the PBoC to still deliver a TMLF before end-2019, at a lower rate of 3.10%, providing more incentives for banks to fund small-to-medium enterprises during the fourth quarter.”

“Today’s rate cut is in line with our view on rising deflationary risks in China’s industrial sectors.”

“The PBoC will maintain its prudent stance and the room for further easing will be restrained by the rising debt-to-GDP ratio.”