Economist Ho Woei Chen, CFA, at UOB Group, reviewed the recently announced easing measures by the PBoC. Key Quotes “The People’s Bank of China (PBoC) cut the 1Y Medium-term Lending Facility (MLF) rate by 10 bps to 3.15%, following similar moves on the 7-day reverse repo and 14-day reverse repo rates on 3 February, to 2.40% and 2.55% respectively. With the Loan Prime Rate (LPR) pegged to the MLF, the MLF cut is expected to translate to a reduction in the LPR by the same magnitude on the setting date this Thursday (20 February).” “We expect the longer-tenor LPR (5Y & above) to also reflect this MLF cut. The MLF was last cut by 5 bps on 5 November 2019, leading to a drop in the LPR for both 1Y and 5Y & above tenors by 5 bps later in the month. Thus, the move today is expected to see the 1Y LPR at 4.05% on 20 February from current 4.15% and the 5Y & above LPR at 4.70% from 4.80%.” “The MLF cut today clearly signals China’s monetary policy continues to be targeted at maintaining “reasonably ample” market liquidity. We have earlier expected a total of 25 bps cut to the LPR this year and this amount is now likely to be frontloaded in 1Q20 to cushion the negative growth impact from the novel coronavirus (COVID-19) outbreak. If the outbreak is not contained by early-2Q20, then there is likelihood for a more aggressive interest rate cut in China this year.” “Other than interest rate cuts, we expect the PBoC to reduce bank’s reserve requirement ratio (RRR) as a further boost to the credit channels. After the 150 bps cut in banks’ RRR in 2019 and another 50 bps cut in January 2020, we are still projecting at least one more RRR cut within the next 3-6 months.” FX Street FX Street FXStreet is the leading independent portal dedicated to the Foreign Exchange (Forex) market. It was launched in 2000 and the portal has always been proud of their unyielding commitment to provide objective and unbiased information, to enable their users to take better and more confident decisions. View All Post By FX Street FXStreet News share Read Next GBP/JPY sits near multi-day lows, below mid-142.00s ahead of UK jobs data FX Street 2 years Economist Ho Woei Chen, CFA, at UOB Group, reviewed the recently announced easing measures by the PBoC. Key Quotes “The People’s Bank of China (PBoC) cut the 1Y Medium-term Lending Facility (MLF) rate by 10 bps to 3.15%, following similar moves on the 7-day reverse repo and 14-day reverse repo rates on 3 February, to 2.40% and 2.55% respectively. With the Loan Prime Rate (LPR) pegged to the MLF, the MLF cut is expected to translate to a reduction in the LPR by the same magnitude on the setting date this Thursday (20 February).” “We expect the longer-tenor LPR (5Y… Regulated Forex Brokers All Brokers Sponsored Brokers Broker Benefits Min Deposit Score Visit Broker 1 $100T&Cs Apply 0% Commission and No stamp DutyRegulated by US,UK & International StockCopy Successfull Traders 9.8 Visit Site FreeBets Reviews$100Your capital is at risk. 2 T&Cs Apply 9.8 Visit Site FreeBets Reviews$100Your capital is at risk. 3 Recommended Broker $100T&Cs Apply No deposit or withdrawal feesTrade major forex pairs such as EUR/USD with leverage up to 30:1 and tight spreads of 0.9 pips Low $100 minimum deposit to open a trading account 9 Visit Site FreeBets ReviewsYour capital is at risk. 4 T&Cs Apply Visit Site FreeBets ReviewsYour capital is at risk. 5 Recommended Broker $0T&Cs Apply Trade gold, silver, and platinum directly against major currenciesUp to 1:500 leverage for forex trading24/5 customer service by phone and email 9 Visit Site FreeBets ReviewsYour capital is at risk.