The PBOC has lowered its short-term policy rate for the first time since last summer, in line with our expectation for a cut this quarter. Its efforts to prevent long-term yields from falling therefore do not preclude some continued monetary easing, provided it is small in magnitude. The move comes on the back of last week's Third Plenum, which signalled the leadership's concern about the current state of the economy and promised additional near-term support.
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