What's new — PBOC announced a shocking cut of 108bp for the 1-yearl ending rate and deposit rate after the market closed today. This is by far themost aggressive move PBOC has ever done in our memory. The lending rate now stands at the second lowest over the last two decades (the lowest point was 5.31%, effective between Feb 21,2002 and Oct 29, 2004). With more rate cuts expected over the next 6-12 months, there is little doubt China is entering an unprecedented low-interest environment.