China has room to cut rates says PBOC

Comments from the PBOC after they cut rates

• Has room to cut as consumer prices level is low
• Will have to flexibly use mon pol tools
• Has cut RRR to keep the banking system liquidity ample
• Interest rates have been cut because changes in CPI are not in line with changes in GDP
• CPI and level of rates offer room to remove the rate cap
• China will intensify policy fine tuning
• Will continue to monitor economy and prices closely

The deposit rate ceiling removal is perhaps the bigger action here as it was in place to limit costs to borrowers. They are in the proverbial rock and hard places as while they want to give banks a looser leash to set rates, they don't want to pile on additional pressure to borrowers