Chinese MonPol matters will come under the....>

CHINA: Chinese MonPol matters will come under the microscope in the next couple

of sessions, especially given the PBoC's unwillingness to shift the interest

rate that it applies to its MLF ops. The 1st port of call will be today's open

mkt ops (if the PBoC chooses to conduct any). There is a chance that the Bank

will cut the rate that it applies to its reverse repo ops in the wake of the

latest FOMC decision, however, this shouldn't be viewed as a given as the PBoC

hasn't always followed through with such moves in the wake of Fed MonPol tweaks.

- Focus will also fall on tomorrow's Loan Prime Rate (LPR) fixing, with the

potential for a lower LPR setting given the recent, broad RRR cut from the PBoC,

although money market dynamics & the aforementioned decision to not cut the rate

applied to the PBoC's MLF ops introduces some uncertainty surrounding the

chances of such a move. It is worth noting that even though the interest rate

applied to the MLF hasn't moved it only forms part of the LPR, which means that

any moves in the fixing will be driven by the spread (credit premium) between

the LPR & MLF. Deep moves shouldn't be expected, with the PBoC aiming to

maintain "prudent" MonPol and avoid the deployment of flood like stimulus.