Analysts: Fed easing could prompt first PBOC rate cut in four years - Reuters

In the view of analysts and market watchers, the People’s Bank of China (PBOC) could cut its benchmark policy rate for the first time in four years should the US Federal Reserve (Fed) slash the Fed funds rate later this month.

Key Findings:

“The People’s Bank of China (PBOC) is more likely to follow any U.S. rate cut by lowering its key short-term money market rates.

Some analysts believe GDP growth is nearing the lower end of the government’s 2019 target range of 6-6.5%, reinforcing expectations that more support is needed soon.

In a bid to spur more lending, the PBOC has injected huge amounts of liquidity into the financial system. But analysts say that has not jumpstarted investment as much as planned.

They say a system-wide cut in interest rates may offer struggling firms more immediate relief.

China has not changed its benchmark one-year lending or deposit rate since October 2015.”