China surprises with modest rate cut amid growing yuan risks. // PH 24Aug2023 News #2

The People's Bank of China (PBoC) cut its 1-year loan prime rate (LPR) by 10bps to 3.45%, which surprised the market by keeping the 5-year LPR status quo at 4.20% in its August 2023 decision. Earlier, the PBoC cut the rate of the one-year medium-term lending facility (MLF) by 15 basis points from 2.65% to 2.50%.

Moving forward, we expect the monetary policies are likely to stay accommodative while more expansionary policies to be in place in order to bolster the Chinese economy.

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