China’s interest rate cut was a welcome surprise for markets, spurring a global stock rally on Friday, but economists caution that the move is no magic fix for the slowing economy.
“It lowers the downside risks to the economy but probably doesn’t change the baseline forecast for slower growth in 2015 than in 2014,” Bill Adams, senior international economist at PNC told CNBC on Monday.
After resisting calls for broad-based monetary easing, the People’s Bank of China (PBoC) cut interest rates late Friday, reducing the 12-month benchmark lending rate by 0.40 percentage points to 5.6 percent and the 12-month benchmark deposit rate by 0.25 percentage points to 2.75 percent.
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.