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Policy Rates (Feb.)

Today’s 25bp cut to the 5-year LPR is clearly aimed at supporting the housing market. On its own it will not revive new home sales. But coupled with efforts to provide increased credit support to developers, today’s cut should help to reduce pressure on the property sector somewhat. The bigger picture though is that the PBOC remains reluctant to embrace the sizeable and broad-based rate cuts needed to drive a strong acceleration in credit growth and therefore economic activity.

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