Money Street News


China slashed its benchmark rate for mortgages

Analysis via National Australia Bank:

  • The size of the cut is impressive. It was larger than
    expected, and encouragingly it does show authorities are now
    really putting their words into actions.
  • The PBoC in
    particular has stated its commitment to reinvigorating the
    economy, given those concerns around deflationary forces and a
    consumer that remains very subdued.
  • The question of course is whether a lower rate really going
    to make a difference, considering rates were already at record
    low levels. It remains to be seem, but certainly it’s
    encouraging to see that there’s a serious commitment to
    supporting the economy, and particularly to invigorating the
    consumer.

Analysis via ANZ:

  • Today’s rate cut suggests that senior policymakers still
    believe that economic headwinds are mainly focused on some
    individual sectors.
  • Although the cut to the 5-year LPR is decent, it seems it’s
    a bit late. It will still take some time to observe the
    stimulating effect on real estate market. Recent declines in
    housing prices have transmitted pressure to the overall economy,
    and by simply saving the real estate industry is not enough to
    solve the problem of insufficient domestic demand.
  • We maintain
    our expectations of two policy rate cuts this year.



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