China's PBoC cut rates in surprise Friday move: China's PBoC cut interest rates for the first time since June 2012 late on Friday evening with the bank lopping...

China's PBoC cut rates in surprise Friday move: China's PBoC cut interest rates for the first time since June 2012 late on Friday evening with the bank lopping benchmark lending rates 40bps to 5.60%. In a further sign that the bank continues to push ahead with financial market reform, their benchmark deposit rate was cut by 25bps to 2.75%, some 15bps less than the lending rate, with the spread between the two narrowing to 285bps, the lowest level seen since May 1999. In addition to this the bank also increased the maximum amount banks can pay above the benchmark one-year deposit rate from 1.1 to 1.2 times and scrapped all limits for deposits of 5-years in duration. While definitely a surprise move, given many believe the move won't be enough to spur sagging lending growth, expect to hear plenty of calls for a RRR cut before the end of 2014. (VIEW LINK)