China central bank seen cutting medium-term policy rate: Reuters poll

SHANGHAI/SINGAPORE : China's central bank is widely expected to cut the borrowing cost of medium-term policy loans for the first time in 10 months on Thursday, after it lowered two key short-term policy rates, a Reuters poll showed.

China remains an outlier among global central banks as it loosens monetary policy to shore up a stalling recovery but further rate cuts will widen the yield gap with U.S. assets and risk greater outflows. Among them, 31 or 94 per cent of all respondents expected a 10-basis-point cut, while one predicted a 5-basis-point reduction and the other one forecasted a deeper cut of 15 basis points.

The MLF rate serves as a guide to the benchmark loan prime rate , and markets usually use the medium-term rate as a precursor to any changes to the lending benchmark. The monthly fixing of the LPR will be announced on June 20.

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