People’s Bank of China Likely to Cut Rates Furthur Underscoring Policy Divergence with Major Central Banks

According to Bloomberg forecasts the People’s Bank of China is expected to keep interest rate on its one-year policy rate loans unchanged on Tuesday, when it’s scheduled to conduct monthly medium-term lending facility operation. The consensus was put forward by 16 out of 27 economists while six of them expect 10-basis point cut and another see 5-point reduction.

It is be noted another cut after last month’s 10 basis point cut would mean a aggressive step from the PBOC. The move would lead to a divergence of policy with major central bank in the world where most are set to increase interest rate.

“The government’s actions to stimulate borrowing demand is starting to deliver results, and market expectations for the economy are recovering under the proactive property, credit and fiscal policies,” said Ming Ming, head of fixed income research at Citic Securities Co, as reported by Bloomberg.

“There’s no need for the PBOC to cut interest rates further in the short term.”