It is reported that the rates on one-year time deposits may drop by at least 20 bps while those for longer tenors may come down by at least 25 bps. The Chinese banks will be guided by the PBOC’s interest rate self-disciplinary mechanism to lower rates on a number of deposit products.
For some context, commercial banks in China do have some control over setting their own rates but are “guided” by a ceiling and floor that is set by the PBOC’s interest rate self-disciplinary body. In any case, the moves here are a follow up after China announced a sweeping package at the end of last month to cut mortgage rates.
In terms of deposit rate reductions, this will be the second one this year after a big round in July as well.
This article was written by Justin Low at www.forexlive.com.
