China’s economy teeters on the edge, as the People’s Bank of China (PBoC) has unleashed a wave of drastic rate cuts in the past 30 days. With the one-year loan prime rate slashed by 0.2 percentage points and the reserve requirement ratio shaved by 0.5%, Beijing is sending a loud and clear signal: things are spiraling faster than expected. The 14-day reverse repo rate, dropping from 1.85% to 1.65%, adds another layer of urgency, pushing liquidity into the system to desperately keep it afloat.
But what do these cuts truly indicate? Beneath the surface, China’s growth engine is sputtering. These moves may momentarily inject liquidity, but they signal a deeper issue—a faltering economy struggling to sustain momentum. The lowering of rates, while offering short-term relief, points to a looming financial storm.
Sources:
apnews.com/article/china-economy-banks-rates-pboc-642053f11cbb9cfa2ca57b38593ce7f8
time.com/7024607/china-economy-pboc-stimulus-interest-rate-cut-analysis/
money.usnews.com/investing/news/articles/2024-07-21/china-central-bank-cuts-short-term-policy-rate
China keeps giving. Another rate cut today.
*PBOC CUTS 14-DAY REVERSE REPO RATE TO 1.65% FROM 1.85% pic.twitter.com/aZeZzcSlX1
— David Ingles (@DavidInglesTV) September 27, 2024