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China Initiates Easing Blitz With Biggest-Ever MLF Cut
As expected, China cut the rate on one-year policy loans Wednesday, a day on from Pan Gongsheng's big stimulus unveil.
I realize this is terribly tedious, but we're either interested or we aren't. And I suppose we are.
To briefly recapitulate, the one-year MLF rate (the rate the PBoC cut on Wednesday) served as the de facto policy tool until a few months ago, when the PBoC shifted to signaling the market with short-tenor repo. Banks set two key consumer lending rates -- the one- and five-year
Reading Chinese banks’ NIM may be reduced -20bp, ROA -14bp, and deposit rates -25bp – from S&P Global. Not that investing in Chinese banks is anything I’d remotely consider.
Yeah, I mean they’re just Party appendages.
So, jump ahead, what does China do next when this doesn’t work? Will Xi tell Pan to keep pushing on the string, take lending rates to zero? If demand for loans is the problem, will they start pressuring companies and people to borrow more, and how?