China offered up a taste of what to expect next year earlier today
- PBOC lowers interest rate on 14-day reverse repos to 2.65% (prior 2.7%)
- More on that PBOC rate cut (to the 14-day RR)
Eamonn had the headlines up earlier in the session (⬆️). The above action follows a similar cut to the 7-day repo rate seen last month here, which was a prelude to the cut in the country's loan prime rate last month as well.
This just reaffirms that the PBOC is paying close attention to liquidity conditions - especially with the need to keep year-end liquidity more steady - and that they are taking steps to try and curb the slowdown in the domestic economy.
But if anything, the cuts to the rates are expected to continue in a more gradual and shallow manner as we have seen over the past two months. I reckon China is seeing this step as a need to keep credit growth stable to not let the economy weaken too much.
The loan prime rate monthly fixing is scheduled for this Friday so look out for any changes to that - expectation before today was that the rate is to stay unchanged.
