- The PBOC cut loan and deposit benchmark rates a further 25 bps - with the 1Y loan benchmark down to 4.35% and the 1Y time deposit benchmark to 1.50% - citing deflationary pressures and a need for stronger monetary stimulus to lower real financing costs.
- The PBOC also reduced the reserve requirement by another 50 bps - to 17.5% for major banks - indicating uncertain conditions ahead for banking system liquidity, due partly to a decline in foreign reserves and partly to seasonal tightness in October from tax payments.
- This so-called "double cuts" is expected to spur roughly RMB 750 bn of liquidity into the banking system.
- The central bank also fully removed caps on deposit pricing.
2. PBOC could adjust FX rate again after November...
IP growth fell to 5.7% y/y from 6.1% in August, the weakest since March. Electricity output growth remained anaemic, at -3.1% y/y. Coupled with the -5.9% y/y PPI reading, it means nominal IP growth was -0.5% y/y...
3. Inclusion of CNY to SDR
- SC : $ 1 tn of 11.3 tn, global total FX reserves, could move to RMB assets
- BoA : expects 13% weight for SDR larger than sterling, 11.3%
- HSBC : expects 14% weight...
4. ... This could amplify risk appetite as economic worries in China ease further rather than fears increase...
5. Saudi Arabia Will Be Broke In 5 Years, IMF Predicts...
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