Technical Analysis

China state financial media says there is room for lower interest rates, lower RRR

China Securities Journal with the opinion piece:

  • China has the policy space to lower the RRR
  • China has policy space to lower interest rates
  • There is also room to lower rates to the property sector

China has already lowered rates to first home buyers:

The next interest rate setting from the People’s Bank of China is on January 20, 1- and 5-year loan prime rate (LPR) settings. Ahead of that will be extra injections of liquidity via open market operations (OMO), and perhaps even a medium-term lending facility (MLF) into Chinese New Year holidays (commencing January 21). Current LPRs are:

  • 3.65% for the one year
  • 4.30% for the five year

RRR is Reserve Requirement Ratio, the amount of cash that banks must hold as reserves. A cut to the RRR frees funds for lending into the system.

Coming up later from China:

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