The latest from the People’s Bank of China has been an RRR cut:
and rates left unchanged
Via UOB, their outlook for the People’s Bank of China from here:
- Banks have issued a record CNY6.71 tln of new loans in the first two months of the year (vs. CNY5.21 tln in the same period of 2022) and there may be concerns that the pace of credit expansion could ease sharply in the later part of the year
- We now see the 1Y MLF rate to remain steady at 2.75% and consequently the 1Y LPR at 3.65%, for the rest of 2023.
- More important to watch will be the 5Y LPR as a reduction to the rate will signal stronger government support to the real estate sector.
- another RRR reduction later this year cannot be ruled out
