China cuts short-term interest rates by 10 basis points
With China’s economic realities, the country does not score well in many parameters, he said People’s Bank of China The People’s Bank of China (PBOC) is forced to cut short-term interest rates. It is now shifting from 2 percent to 1.9 percent.
Why is this important?
A strong reopening of China after the zero COVID policy was expected, but the country failed to gain momentum.In the news: The People’s Bank of China (PBOC) cuts the seven-day repo rate by 10 basis points. With this, the bank hopes to have two billion Chinese yuan (about $280 million) in circulation, according to reports CNBC.
- It’s the first downward move in interest rates since August 2022. Last week, some major Chinese banks actually cut savings rates. A sign that more loose monetary policy was imminent.
- Shortly after the news was published, the yuan fell about 0.25 percent against the dollar, to about 7.16 yuan. The lowest point since November 2022.
- “The government is trying hard to boost domestic consumption, especially in the private sector,” said Yang Liu, chief investment officer of Atlantis. CNBC.
Bad report
- If we include economic indicators, the China report is bad.
- Producer prices fell 4.6 percent in May, the biggest loss in 7 years.
- The inflation rate was 0.2 percent last month and 0.1 percent in the previous month compared to the previous year. On a monthly basis, inflation decreased by 0.2 percent. So the fear of deflation is not far off.
- Chinese exports also fell by 7.5 percent.
- Although it is not only the Chinese economy that has to come home with bad points. The eurozone has officially entered a recession, and the US expects a recession later this year.
- This week, it is up to the Federal Reserve (Fed) and the European Central Bank (ECB) to decide on interest rates.
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