The People’s Bank of China (PBOC) will start cutting rates from next month, but the borrowing costs are expected to come down only gradually, according to a Reuters report.
The Sino-US trade tensions and the resulting economic slowdown warrants a drop in interest rates. The central bank, however, will refrain from aggressive easing as that could fuel a further build-up in debt and squeeze banks’ profit margins, heightening risks to the financial sector.
Also, will not push lenders too hard to lower rates at first, as banks need time to get used to the market-oriented loan pricing system, analysts said.
Ting Lu, China economist at Nomura expects the PBOC to cut its one-year marginal lending facility (MLF) rate by around 10 basis points next month.
Share
