PBOC First Rate Cut Since 2012 Signaled in Swaps: China Credit
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The cost of locking in Chinese borrowing costs is poised to drop below the central bank’s savings benchmark for the first time since 2012 as speculation mounts that interest rates will be cut.
The one-year swap, a fixed payment to receive the floating seven-day repurchase rate, fell as much as 2.18 percentage points in 2014 to 3.04 percent yesterday in Shanghai, near the official 12-month deposit rate of 3 percent. The last time the contracts were lower than the benchmark was in 2012, when the People’s Bank of China reduced savings and loan costs twice.