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China ready to cut rates again - Reuters

FXStreet (Bali) - As pessimism about low prices increases, Friday's Chinese rate cut might be only the first of a series to follow, according to sources cited by Reuters.

A more prolonged loosening cycle, including further rate cuts, and more accesible lending measures, might be what is required in order to ease concerns that lower prices could spark the risk of debt defaults, business' bankruptcies, and job losses, said unnamed sources involved in policy-making, according to Reuters.

Reuters adds, citing a senior economist at a government think-tank involved in internal policy discussions: “Top leaders have changed their views."

Reuters expands: "The economist, who declined to be named, said the People’s Bank of China had shifted its focus toward broad-based stimulus and were open to more rate cuts as well as a cut to the banking industry’s reserve requirement ratio (RRR), which effectively restricts the amount of capital available to fund loans."

“Further interest rate cuts should be in the pipeline as we have entered into a rate-cut cycle and RRR cuts are also likely,” the think-tank’s economist said.

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