Surprise Rate Cut Confirms Economic Support Measures

Key News

Asian equities were mixed on lower volumes overnight as Hong Kong underperformed the region.

The People’s Bank of China (PBOC), China’s central bank, unexpectedly cut the 1-year medium-term lending facility (MLF) rate by 15 basis points from 2.65% to 2.50%. Most analysts had expected the rate to be unchanged. Although a small cut, going above expectations in terms of policy easing is a sign that officials are serious about supporting the economy. This also opens the possibility of a cut to the 5-year loan prime rate (LPR), which sets mortgage rates and would go a long way in helping the real estate sector.