MLF Cut, Lower LPRs Still Likely - Analyst

The People’s Bank of China will likely lower the Medium-term Lending Facility rate and guide banks to lower deposit rates to promote the downward movement of the benchmark Loan Prime Rate, said Dong Ximiao, chief researcher at Merchants Union Consumer Finance. Though the March LPRs were kept unchanged this week, Dong believes the one-year and five-year maturities still have room for a 10 and 15 bp cut within the year, depending on changes in banks’ funding costs and the economic recovery process. It will be necessary to guide the nominal loan interest rate down quickly by cutting the policy interest rate to alleviate the upward pressure on the real-interest rate amid low inflation, said Wang Qing, chief macro analyst at Golden Credit Rating. (Source: 21st Century Business Herald)