PBOC May Cut LPR by 5 bp on July 20: Yicai.com

The PBOC may cut its one-year Loan Prime Rate, the central bank's guidance for lending, by 5 bp on July 20 when the monthly-set guidance is released, Yicai.com reported citing economists including Ding Shuang at Standard Chartered. The cut became more likely after the central bank had lowered the required reserve ratios by 0.5 pp for all lenders on July 9, unlocking CNY1 trillion, Yicai said citing the economists. The PBOC may further cut the RRR by 0.5 pp to help renew as much as CNY2.45 trillion maturing MLF, Yicai said citing economists. The central bank's expected move may come on the rising expectation that the U.S. Federal Reserve may be forced to begin scaling back easing to cool inflation, Yicai said. China's businesses need a financial boost given the lack of fiscal stimulus in H1, including the slower-than-usual issuances of local government debt, the newspaper said citing Lian Ping, the chief economist at Zhixin Investment.