A report from Reuters outlines the likely path for People’s Bank of China interest rate cuts, maybe as early as September.

• expected to first reduce their funding costs by lowering the rate on its medium-term lending facility (MLF)
• That will open the door for a cut in the PBOC’s new benchmark lending rate, the loan prime rate (LPR), the next time it is set on September 20
• he MLF forms the basis for the new LPR rate, but banks can add a premium to reflect funding costs and credit risks
• In what was seen as a symbolic move, the revamped one-year LPR was set at 4.25% last week, down 6 basis points (bps) from 4.31% previously and 10 bps lower than the existing benchmark one-year lending rate, which will still apply to older loans