PBOC Cuts Interest Rates For 6th Time In Year, Markets Rallied
China’s central bank cut interest rates for the 6th time since November 2014 on Friday, and it again lowered the amount of cash that banks must hold as reserves in another attempt to jumpstart its slowing economy.
China’s monetary policy easing is at its most aggressive since the Y 2008/09 global financial crisis, underscoring concerns within Beijing about the health of the world’s 2nd-largest economy.
The People’s Bank of China (PBOC) said on its website that it was lowering the one-year benchmark bank lending rate by 25 bpts to 4.35%, effective from 24 October.
Economic data in Q-3 has demonstrated the daunting challenges faced by the country’s leaders, not least in attaining the 7% growth target set by the government.
Data released Monday showed China’s economy grew 6.9% in Q-3 from a year earlier, dipping below 7% for the 1st time since the global financial crisis.
The 1-year benchmark deposit rate was lowered by 25 bpts to 1.50 percent.
The RRR will also be cut by 50 bpts for all banks, taking the ratio to 17.5% for the country’s biggest lenders, the PBOC said in a statement.
Buoyed by China’s easing, which came late in the evening in Asia, European shares turned higher and the Chinese offshore RMB Yuan fell against the USD.
The pan-European FTSEurofirst 300 extended gains to trade 2.2% higher at 1,493.60, with miners jumping 2.9% in the minutes after the move.
China’s offshore RMB Yuan hit a 4-week low of 6.3958 to the USD after the decision.
Stock markets in the EU and US rallied.
Have a terrific weekend.
HeffX-LTN
Paul Ebeling
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