PBOC governor Zhou's past signals likelihood of further rate cuts

In his 12 years as People's Bank of China governor, Zhou Xiaochuan has never stopped at a single shift to benchmark interest rates once prompted into action.

Zhou, who took office in 2002 when Alan Greenspan was still chairman of the Federal Reserve, has overseen two tightening and two easing cycles for 22 moves to the one-year lending rate and 20 to the one-year deposit rate.

Simple maths suggests his latest cut is unlikely to be a one-off.

By joining Mario Draghi of the European Central Bank and Haruhiko Kuroda of the Bank of Japan in the global stimulus camp, Zhou signalled deeper concern over China's outlook and recognition that targeted measures alone were not going to be enough to revive growth.

"Expect more interest rate cuts ahead," said Shane Oliver, the head of investment strategy at AMP Capital Investors. "China's rate cut highlights that global monetary conditions are still easing with monetary easing in Japan, Europe and China taking over from the end of quantitative easing in the US."

The one-year lending rate would be 5.35 per cent in the second quarter of next year and the one-year deposit rate would be 2.5 per cent, according to the median forecast of economists surveyed.