Barclays Economist Chang: PBOC may cut benchmark interest rate today - Bloomberg
|According to a team of economists led by Jian Chang, the Chinese central bank, the PBOC, could cut its benchmark interest rate as soon as February 1st, in lieu of the recent downbeat Chinese fundamentals, Bloomberg reports.
Barclays Forecasts the PBOC will cut benchmark rates twice, by 25 basis points each in the first and second quarters.
Key Quotes:
“Existing measures are not sufficient to lower the financing costs of the real economy, in a down-cycle with rising credit risk and falling producer-price inflation.”
“Hence, lowering the risk-free rate is unavoidable, in our view.”
With a more “patient” stance being adopted by the U.S. Federal Reserve this week, and the Yuan’s robust performance in January, previous impediments to cutting borrowing costs more broadly in China have been removed.
“The dovish tone and proactive stance exhibited by the PBOC in January underscore significant downward pressure on growth from both weak domestic demand and a rapid deterioration in the external environment.”
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