PBOC May Consider RRR Cuts in Q4: Herald

The PBOC may cut banks' reserve requirement ratios as early as in October to fill the liquidity gap caused by accelerated issuance of local government bonds, the 21st Century Business Herald reported citing analysts. The liquidity shortage is estimated to be around CNY1.4 trillion, as the net financing of government bonds in October will be around CNY860 billion, and October is the tax payment peak with CNY500 billion MLFs maturing, the newspaper said citing Yang Yewei, the chief analyst at Guosheng Securities. October is a suitable time window for an RRR cut to smoothen liquidity, or it could affect the cross-cycle adjustment and the policy convergence going into the next year, the newspaper said citing analysts from Huachuang Securities.