PBOC may deliver another rate cut as liquidity pressures mount – Bloomberg – NDDFX Forex Broker

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PBOC may deliver another rate cut as liquidity pressures mount – Bloomberg

PBOC may deliver another rate cut as liquidity pressures mount – Bloomberg

by Stephen Innes 14.05.2020

Early Thursday morning in Asia, Bloomberg came out with the news suggesting the People’s Bank of China (PBOC) could announce this year’s third rate cut for medium-term loans to ensure sufficient liquidity.

Key quotes

The People’s Bank of China is expected to roll over at least part of the 200 billion yuan ($28 billion) in the medium-term lending facility that comes due on Thursday, at a charge lower than the current 2.95%, according to analysts. They are anticipating a cut of up to 20 basis points in the one-year loan rate.

The bond market may react negatively to send yields higher if the central bank disappoints traders with no rate cut, said Brad Gibson, co-head of Asia Pacific fixed income portfolio management at AllianceBernstein in Hong Kong.

FX implications

Following the news, AUD/USD registers an uptick from 0.6453 to 0.6458 but stays pressured amid broad risk-off. The additional rate cut from the largest customer suggests a positive move by the Aussie pair.

Stephen Innes

With more than 25 years of experience, Stephen has a deep-seated knowledge of G10 and Asian currency markets as well as precious metal and oil markets. He is regularly called upon by leading TV, radio and print publications to offer my views on the financial markets. Stephen appears extensively on global news channels such as Bloomberg, BBC, Reuters, CNBC, Sky TV, Your Money, Channel News Asia, CNN, France 24 and ASTRO Awani. As well as published in prestigious publications, the New York Times, Wall Street Journal and The Economist, among others.

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