China PBOC cuts interest rates and RRR

China cuts rates. Interest rate cut effective tomorrow, RRR cut effective September 6th

• Cuts interest rate by 25bps (1 year lending rate cut to 4.6%, deposit rate cut to 1.75%)
• Cuts RRR by 50bp
• Removes upward cap on deposits more than 1 year

PBOC says

• Economy faces downward pressure
• Work to maintain stability is difficult
• RRR cut to provide long-term liquidity
• Financial volatility requires more flexible monetary policy tools
• Overall inflation is still low
• Lower inflation creates conditions for using policy tools to lower borrowing costs

So much for my thoughts on waiting a bit. 1-0 to Adam ;-)

It took a while for currencies to pick up on the headline and we're not seeing anything wild from them. USDJPY stepped up to 120.00 but is back below and there's around 30-40 pip moves in AUDUSD, cable and the euro

They've also tinkered with the RRR for various sectors;

• Cuts an additional 300bps for financial leasing and auto leasing companies
• Additional 50bps for rural commercial and corporate banks

Stocks are liking it more than currencies, as are bond yields. The market is likely to be calmed that China has stepped in with monetary policy but perhaps may be holding out for some fiscal policy announcements too