China cut only one Loan Prime Rate, and less than expected – here's why

<p>This snippet from UBS on yesterday's disappointment from the People's Bank of China:</p><ul><li>China cut its one year loan prime rate, but less than markets had anticipated. </li><li>For those bewildered by the plethora of policy tweaks in China, it is best to look at the bigger picture. China is easing policy, but the focus may be on supporting rather than stimulating consumption—lowering costs for existing borrowers more than encouraging stronger credit growth.</li></ul><p>Bolding above is mine. The new normal is lack of stimulus from China.</p><p>I posted yesterday on China's deleveraging efforts overtaking the desire for growth, </p><ul><li><a href="https://www.forexlive.com/centralbank/aud-and-nzd-marked-lower-after-the-peoples-bank-of-china-rate-cut-is-less-than-expected-20230821/" target="_blank" rel="follow">There is no doubt that deleveraging is a Chinese policy goal</a></li></ul><p>Whis is a worry for the rest of the world … <a href="https://www.forexlive.com/terms/a/aud/">AUD</a> for example:</p><ul><li><a href="https://www.forexlive.com/centralbank/audusd-at-risk-of-dropping-under-060-unless-china-stimulates-big-time-20230821/" target="_blank" rel="follow" data-article-link="true">AUD/USD at risk of dropping under 0.60 (unless China stimulates, big time)</a></li></ul><p>ps. Here is the PBOC decision yesterday:</p><ul><li><a href="https://www.forexlive.com/centralbank/pboc-loan-prime-rates-lpr-cut-1-year-345-prior-355-5-year-42-prior-420-20230821/" target="_blank" data-article-link="true">PBOC Loan Prime Rates (LPR) CUT: 1-year 3.45% (prior 3.55%) &amp; 5 year 4.2% (prior 4.20%)</a></li></ul>

This article was written by Eamonn Sheridan at www.forexlive.com.