VIEW: ANZ: LPR Cut Signals That Rate Cuts Remain In Toolbox

ANZ note that today’s 1-Year LPR fixing cut reinforces their “view that authorities are increasingly open to cutting interest rates amid looming economic headwinds. The LPR cut will trim the interest burden by around CNY80bn per year starting 2022, in line with the pledge by senior leaders at this year’s Central Economic Work Conference (CEWC) to bring forward growth stabilising policies. The reduction in bank liability costs contributes to this cut, thanks to the new limits on deposit rates and the RRR cut made in in the later part of 2021. The 5-Year LPR was left unchanged this time, reflecting the government’s intention not to use the property sector to stimulate economic growth.”