China to cut interest rates from September - Reuters

Omkar Godbole FXStreet Contributor

The People's Bank of China (PBOC) will start cutting rates from next month, but the borrowing costs are expected to come down only gradually, according to a Reuters report.

The Sino-US trade tensions and the resulting economic slowdown warrants a drop in interest rates. The central bank, however, will refrain from aggressive easing as that could fuel a further build-up in debt and squeeze banks’ profit margins, heightening risks to the financial sector.

Also, will not push lenders too hard to lower rates at first, as banks need time to get used to the market-oriented loan pricing system, analysts said.

Ting Lu, China economist at Nomura expects the PBOC to cut its one-year marginal lending facility (MLF) rate by around 10 basis points next month.

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

Markets move fast. We move first.

Orange Juice Newsletter brings you expert driven insights - not headlines. Every day on your inbox.

Editor's Picks

EUR/USD trims losses and returns to the 1.1750 area

The US Dollar resumed its decline in the American afternoon, helping EUR/USD trim early losses. The pair trades around 1.1750 as market participants gear up for the European Central Bank monetary policy decision and the United States Consumer Price Index.