This helps explain why 30-year Chinese government bond yields are down 40 basis points this year, recently hitting a record low of below 2.4% and coming within a whisker of dropping below 10-year yields, which also have hit 22-year troughs.
Analysts reckon the People’s Bank of China will leave its one- and five-year loan prime rates unchanged, after it left key bank lending rates on holds earlier this month.
Despite the deflationary pressures still stalking the economy, monetary policy has “pretty much reached the limits of what it can do … and so any further easing is likely to be modest,” according to Win Thin at BBH.
Bank Indonesia, meanwhile, is also expected to hold rates for a fifth month on Wednesday but cut in the second quarter of the year, according to a slim majority of economists in a Reuters poll.
With inflation within the target range of 1.5% to 3.5% since July and the economy showing signs of a slowdown, all 31 economists in the March 8-15 poll agreed the central bank’s next move would be a cut. The only issue is when.
