Nomura cites a "strong signal" for a cut to MLF rate this week and the LPR next week

Last week China commercial banks cut rates:

• More Chinese banks cut rates
• Industrial and Commercial Bank of China cuts yuan deposit rates

Nomura looking for a 10bp cut:

• “We believe the cut in banks’ deposit rates sends a strong signal that the PBOC is paving the way for a cut in benchmark lending rates (MLF) to guide down LPR”
• “This new round of deposit rate cuts, as well as rapidly worsening exports, broadening property distress, ongoing disinflation, and a likely Fed pause, raise our conviction of this call on rate cuts”

The Medium Term Lending Facility rate will be set on Thursday this week, the 15th. Loan Prime Setting will follow on the 20th, the following Tuesday.

Currently:

• MLF one-year interest rate 2.75%
• one-year LPR 3.65%
• the five-year LPR 4.3%