I posted a heads-up to the PBOC decision last week. Its due around 0115 GMT, which is 9.15 pm US Eastern time.
Last week we had rate cuts from the People's Bank of China:
- People's Bank of China set MLF rate at 2.5%, big cut from prior 2.65%
- The People’s Bank of China cut the reverse repo rate from 1.9% to 1.8%.
- ICYMI: China with three rate cuts in one day to try and bolster the economy
The MLF rate is a benchmark interest rate that banks in China can use to borrow funds from the People's Bank of China for a period of 6 months to 1 year, medium-term liquidity to commercial banks. Changes to the rate are strongly indicative of change to the monthly Loan Prime Rate (LPR) setting on the 20th of each month. Given the 20th was Sunday the LPRs will be today.
Current LPR rates:
- 3.55% for the one year
- 4.20% for the five year
I expect at least a 10bp cut to each. ING expect 15bps:
The PBOC's Loan Prime Rate (LPR):
- It is an interest rate benchmark used in China, set by the People's Bank of China each month.
- The LPR serves as a reference rate for banks when they determine the interest rates for (primarily new) loans issued to their customers.
- Its calculated based on the interest rates that a panel of 18 selected commercial banks in China submit daily to the PBOC.
- The panel consists of both domestic and foreign banks, with different weights assigned to each bank's contributions based on their size and importance in the Chinese financial system.
- The LPR is based on the average rates submitted by these panel banks, with the highest and lowest rates excluded to reduce volatility and manipulation. The remaining rates are then ranked, and the median rate becomes the LPR.
- This snapshot from the ForexLive economic data calendar, access it here.
- The times in the left-most column are GMT.
- The numbers in the right-most column are the 'prior' (previous month/quarter as the case may be) result. The number in the column next to that, where there is a number, is the consensus median expected.
