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.