MNI China Press Digest, Nov 19: Rate cut, MLF, Mon Pol

     BEIJING (MNI) - The following lists highlights from Chinese press reports

on Monday:

     China's one-year loan prime rate (LPR) is expected to be cut by 5 bps to

4.15% on Wednesday following the PBOC's two policy rate cuts earlier this month,

Shanghai Securities News reports. Citing Bian Quanshui, chief analyst at

Sinolink Securities, the report says the standing lending facility (SLF) rate

may also be lowered in the near term, following the cuts to medium-term lending

facility (MLF) and reverse repo rates. The PBOC is also likely to further cut

the MLF rate in the first half of 2020 to guide down the LPR, Bian said.

Designated banks would also update their LPR quotations on the 20th of each

month, serving as a reference rate for new bank loans.

     The PBOC's first cut to the 7-day reverse repo rate in four years

yesterday, which followed an unexpected cut to the medium-term lending facility

rate in early November has led to speculation on the start of a new rate cut

cycle, Shanghai Securities News reports. Some market participants expect the

interest rate corridor has entered a downward cycle, the newspaper said citing

unnamed analysts. The fact that liquidity is still tight after the cut

yesterday, however, indicates market caution, the report said.

     Comments by the PBOC in its quarterly report on the growth of the money

supply showed that the central bank intended to keep its monetary policy

"prudent", state controlled newspaper Economic Daily has reported. The Daily

quoted the quarterly report, released on the weekend, that the PBOC "will keep

the growth of M2 and the growth of aggregate financing on par with the growth of

nominal GDP". Citing Xie Yaxuan, the chief economist at China Merchants

Securities, the Daily's report said the market should not narrowly focus on CPI

data, but should have a comprehensive view of price trends. It should also

consider downward pressure on the economy when predicting the direction of

monetary and fiscal policy.

--MNI Beijing Bureau; tel: +86 (10) 8532-5998; email: flora.guo@marketnews.com

--MNI Sydney Bureau; +61 405322399; email: lachlan.colquhoun.ext@marketnews.com

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