Last month the PBoC cut the 7-day reverse repo rate, and the Medium-term Lending Facility (MLF) rate:

• PBOC 1-year Medium-term Lending Facility (MLF), rate cut to 2% (2.3% previously)

and a matching cut to LPRs is expected tomorrow. Indeed, on Friday PBoC Governor Pan foreshadowed Monday’s rate cut, by 20 to 25 basis points he says.

Current LPRS are:

• 1-year (which most new loans are based on) 3.35%
• 5-year (reference for mortgages) 3.85%

Coming up later in the week from China, on Friday, is the latest Medium-term Lending Facility (MLF). No rate change is expected for this given the cut last month (see link above).

China’s National People’s Congress is yet to come, towards the end of October. Further stimulus measures seem likely from this.

This article was written by Eamonn Sheridan at www.forexlive.com.