PBOC May Cut MLF Rate Next Q2: Journal

The People’s Bank of China may cut the medium-term lending facility rate in Q2 next year to guide a further reduction of the benchmark Loan Prime Rate, the China Securities Journal reported citing Liu Yu, chief fixed income analyst of GF Securities. The 5bps cut to LPR on Monday means a lower possibility for a further policy rate cut soon, as the central bank observes whether financing costs for the real economy are effectively reduced and demand is stabilised, the Journal said citing analysts. Liquidity conditions should be worry-free across the year as the PBOC has added 14-day reverse repos this week and about one trillion yuan of fiscal funds is expected to be released by the end of December, the newspaper said citing analysts.