Breaking News! What are the Signals from China’s Surprise Rate Cut besides the Aim of Lowering Financing Cost for Real Economy?

Published: Jun 15, 2023 16:20

Save

The People’s Bank of China (PBOC) conducted a seven-day reverse repurchase of 2 billion yuan and lowered the rate by 10 basis points to 1.9% on June 13, the first reduction in the rate since August 2022. Experts said that the unexpected move by the PBOC is aimed at improving financing and supporting the development of the real economy.

The move signals that China will strengthen counter-cyclical adjustment and stabilise market.

"If the medium-term lending facility (MLF) winning bid rate on June 15 continues to decline, it will help further reduce banks' funding costs." Dong Ximiao, chief researcher of Merchants Union Consumer Finance Co., said that China's economy is in the recovery stage after the impact of the Covid-19 pandemic. The rate cuts not only reflects the supply and demand of the capital market, but also sends a signal that China will strengthen counter-cyclical adjustment and stabilize market expectations, which means a prudent monetary policy.

The PBOC announced a cut of 10 basis points in the rates of medium-term lending facility operations and open market reverse repurchase operations on August 15, 2022.

On August 22 of the same year, the 1-year LPR and the 5-year-plus LPR were lowered by 5 and 15 basis points respectively.

Some market participants also predict that the MLF rate and LPR this month may be adjusted, which will further reduce the financing cost of the real economy and help stimulate effective financing demand.

The cuts in policy interest rates will effectively boost market confidence and further strengthen the macroeconomic recovery in the second half of the year.

Yi Gang, Governor of the PBOC, said during a survey in Shanghai a few days ago that going forward, the bank will continue to implement a prudent monetary policy accurately and forcefully, strengthen counter-cyclical adjustments, fully support the real economy, promote full employment, and maintain currency stability and financial stability.

More popular news:

SMM Daily Comments (Jun 5): Base Metals Mostly Fell, Ferrous Metals Bucked the Trend to Surge, Oil Gained Further on Saudi Arabia Output Cuts in July

SMM Daily Comments (Jun 6): Base Metals Mostly Rose, Iron ore Surged, Oil Plunged on Sluggish Overseas Economies

SMM Daily Comments (Jun 8): Base Metals Closed Mixed with SHFE Tin Plunging, Iron Ore Soared, Oil Rebounded

SMM Daily Comments (Jun 7): Base Metals Mostly Rose, Ferrous Metals Dropped, Oil down as Russia Dumps Cheap Oil

China Will Issue Massive Bills In Hong Kong This Year

Global Manufacturing PMI Continued To Fall In May, Points To Downturn In Global Economy

SMM Indonesia Nickel and Cobalt Industry Chain Conference: Global Nickel & Cobalt Supply and Demand Prospect, Impact from NEV Development

Indonesia Will Launch Nickel Price Index Applied for Domestic Policies and Deter Export Duties on Nickel Products

Chilean Tax Hike Will Deter Copper and Lithium Mine Investment, Push Japanese Mining Companies to Other 24 Countries

Glencore to Aggressively Expand Copper Capacity

World Bank Raises Forecast for Global Economic Growth in 2023 with Significant Increase for China, Emphasises Dangers of A High-Interest Rate Environment, But Lowers Forecast for 2024

Commerzbank Lowers Price Forecast for Copper, Aluminium, Zinc and Nickel for 2023 and 2024

Rumours Say Glencore Will Raise Takeover Bid for Teck Resources, but Another Big Obstacle Lies Ahead

Commodity Price Bubble Finally Burst, but Metals Demand Will Surge

Market forecast Macro economy Policy

Data Source Statement: Except for publicly available information, all other data are processed by SMM based on publicly available information, market communication, and relying on SMM's internal database model. They are for reference only and do not constitute decision-making recommendations.

For any inquiries or for more information, please contact: lemonzhao@smm.cn

For more information on how to access our research reports, please contact:service.en@smm.cn

Related News

9 hours ago

AI Computing Power Demand Boom Fuels Continuous Climb in Copper Foil Operations; Copper Cable High-Speed Connectors Strengthen, Taichenguang Leads Gains [SMM Express]

9 hours ago

Tertiary Minerals Completes Phase 4 Drilling at Zambia’s Mushima North Copper Project

Tertiary Minerals Plc has completed its Phase 4 drilling programme at Target A1 within the Mushima North Project in Zambia, with early portable X-Ray Fluorescence (pXRF) results identifying further copper mineralisation and supporting previously identified higher-grade zones. The Phase 4 programme comprised 3,639 m of drilling across 39 holes. Early results included an intersection of 15 m grading 0.53% copper from 100 m depth, including 7 m at 0.77% copper. Additional intersections included 4 m at 0.68% copper and 8 m at 0.62% copper, while broader infill intersections returned 65 m at 0.23% copperand 83 m at 0.16% copper. Mushima North is a polymetallic silver-copper-zinc prospect located within Zambia’s prospective Iron-Oxide-Copper-Gold region, approximately 28 km east of the historic Kalengwa copper-silver mine. The latest drilling supports the previously identified near-surface Exploration Target of 15–30 million tonnes grading 40–60 g/t silver equivalent, while also providing further indications of higher-grade copper and silver mineralisation within the target area. Samples from the drilling programme have been submitted for independent laboratory testing, with certified results expected to be released as they become available. Remaining pXRF results from the final nine holes are also expected, covering additional infill drilling at Target A1 and exploration of mineralisation west of Target A1 and at Target A2. With Phase 4 drilling now complete, the project is moving into its next stage of technical evaluation. Initial metallurgical testwork is expected to commence shortly, followed by data compilation and resource modelling. Tertiary Minerals is targeting the delivery of a JORC-compliant Mineral Resource Estimate for Mushima North before the end of 2026, which would provide a clearer assessment of the scale and grade distribution of the mineralised system following the latest drilling campaign.

9 hours ago

Copper Mineralisation Extends Beyond Current Resource at Zambia’s Mumbezhi Project

According to foreign media reports, step-out drilling at the Nyungu Central deposit within Zambia’s Mumbezhi Copper Project has returned further copper intersections, extending a newly identified mineralised zone southeast beyond the boundaries of the current Mineral Resource Estimate (MRE). Recent drilling returned 65.8 m grading 0.42% copper from 226 m, including higher-grade intervals of 17.0 m at 0.58% copper and 13.2 m at 0.82% copper. A separate intersection returned 29.6 m grading 0.34% copper from 237 m, including 5.2 m at 0.80% copper. The results extend the known copper system outside the current resource estimate and provide additional targets for continued exploration. A total of 16 Phase 3 diamond drill holes covering 4,723 m have so far been completed at the southern end of Nyungu Central, while priority assay results remain pending for seven holes. In addition, a 6,200 m infill diamond drilling programme commenced at Nyungu Central in late July, supported by an additional drill rig now on site. Exploration is also continuing across the wider Mumbezhi Project, with four diamond drill rigs currently operating. Three are focused on Nyungu Central, while another is drilling at the regional Sharamba prospect, where exploration is targeting shallow copper mineralisation associated with a strong airborne electromagnetic anomaly. Visual copper mineralisation has been observed in five holes drilled along approximately 700 m of strike on the western side of the anomaly. The latest intersections further extend the known copper mineralisation beyond the existing Nyungu Central resource boundaries, while several priority assay results remain outstanding. Continued step-out and infill drilling will provide further indications of the scale and continuity of the mineralised system and its potential to support future resource expansion at Mumbezhi.

9 hours ago