Policy easing and market movement: tracking China’s rate cuts with TraditionData

Last week Chinese authorities announced sweeping measures to ease policy in attempt to bolster the trade-war hit economy. China has said it will cut its benchmark interest rate, the seven-day reverse repurchased agreements by 10 basis points to 1.4% from the 8th of May, as well as reducing the banks’ reserve requirement ratio (RRR) down to an average level of 6.2 from the 15th of May. The expectation is that the first RRR cut since September last year will release 1 trillion CNY in liquidity.

The announcement came just before U.S and Chinese officials chose to meet in Geneva for trade talks, in an attempt to de-escalate tensions in what has been a tit-for-tat month of tariffs between the two parties. A meeting that bore fruit this week, with the 145% tariffs on goods from China dropping to 30% and the additional levies on US imports falling to 10% from 125%.

“The PBOCs surprise cut in the seven days reverse repurchased agreement rate has seen a 9% fall in the onshore 1 Month rate (CNYQM7R1M=PTCN) and 6% fall in the Offshore CNH rate (CNHQM7R1M=TRHK). With a PBOC Monetary Policy Committee (MPC) meeting scheduled for the 19th of June, the market sentiment is that the 1.4% rate is not here to stay, especially after the series of tariff adjustments between the world’s two largest economics. The onshore and offshore 6- and 12-Month curves have seen much smaller movements, as the expectation is for the rates top return to the 1.5% mark.” Saracen Fletcher, APAC Product Development.

TraditionData’s Interest Rate Swaps data packages provide comprehensive coverage across 33 currencies. Datasets are sourced directly from Tradition’s brokerage desks and further enhanced by our analytics team. These include real-time and end-of-day data for onshore and offshore Chinese Renminbi, offering accurate insights into market trends. By leveraging this data, businesses can better understand fluctuations and make informed decisions in volatile market conditions.