Is the China's rate cut on the way?


The People's Bank of China is preparing to flood the banking system with liquidity to boost lending, according to officials and advisers to the central bank.
WSJ says that the recent PBOC currency moves are squeezing yuan funds out of the market and renewing concerns over capital leaving Chinese shores.The planned step involves cutting the deposits banks are required to hold in reserve forcing it to again resort to the reserve-requirement reduction.
The move, which could come before the end of this month or early next month, would involve a half-percentage-point reduction in the reserve-requirement ratio, potentially releasing 678 billion yuan  in funds for banks to make loans.
What's more, China plans to let its main state pension fund invest in the stock market for the first time. Under the new rules, the fund will be allowed to invest up to 30% of its net assets in domestically-listed shares.
The move is the latest attempt by the Chinese government to arrest the slide in the country's stock market. The fund will be allowed to invest not just in shares but in a range of market instruments, including derivatives. By increasing demand for them, the government hopes prices will rise.