China delivers another rate cut, this time to 14-day reverse repos

Ross J Burland FXStreet

China has delivered another rate cut with the People's Bank of China cutting the rate on 14-day reverse repo by 10 bps.

China’s recent cut of two key policy interest rates opened the door to more monetary easing actions ahead. This is despite the sentiment that the Federal Reserve will probably hike rates from March.

China cut the one-year medium-term lending facility rate and the seven-day reverse repurchase rate for the first time in almost two years earlier this month. The one-year tenor was already dropped by five basis points last month, so all eyes are on whether the five-year rate will decline to allow for cheaper mortgages.

Market implications

Goldman Sachs Group Inc. economists led by Maggie Wei said, “we see a decent possibility for the five-year loan prime rate to be cut by 5 basis points” when it’s announced Thursday, the economists said in a note Monday. The five-year rate is the reference for mortgages and a cut “would send a signal on broad property policy easing.”

Author

Ross J Burland

FXStreet

Ross J Burland, born in England, UK, is a sportsman at heart. He played Rugby and Judo for his county, Kent and the South East of England Rugby team.

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