PBOC cuts 1 year rate by 25bps and cuts RRR by 50bps
- Cuts 1 yr deposit rate by 25bps to 1.50%
- Cuts 1 yr lending rate to 4.35%
- Will cut RRR by additional 50bps for qualifying institutions
- Cuts effective 24th Oct
- Says it is liberalising deposit rates for commercial banks and credit cooperatives
- Will increase regulation of interest rates
- Wants to improve the transmission mechanism of monetary policy
- Removes deposit rate ceiling for banks
AUDUSD takes a leap to 0.7297 from around 0.7260
Most headlines are saying the RRR cut is 50bps but Reuters are saying the cut is 25bps with an additional 50bps cut for the qualifying institutions. It looks like it's just a cut from 18% to 17.5% for most big banks
Update: Reuters have corrected their headlines for the RRR and confirm with everyone else that it has been cut by 50bps
For more on the PBOC cut, check out the highlights of the PBOC statement. For analysis, here are the two ways the market looks at the Chinese rate cut.
So far in 2015 there have been 119 rate moves including today's Chinese move. Of those 69 have been cuts and the rest hikes. The total count for central bank moves is 2014 was 110 with 65 of those being cuts. So much for normalisation following the crisis
