CIMB’s Song Says China Cut Shows Measured Response Toward Growth

Song Seng Wun, an economist with CIMB Research Pte. in Singapore, comments on China’s decision to cut interest rates for the first time since 2008.

“This is not a huge surprise as such a move has been flagged in advance. The only question was will the PBOC cut before or after the latest batch of macro data release. Perhaps the central bank had a preview of the May macro data and felt that the underlying growth momentum is slowing faster than it is comfortable with. Rather than a more aggressive 50 pt, the 25 bp cut is an indication that the central bank is taking a more measured response than be panicked into a more aggressive response.”

On further RRR cuts:

“Yes. There should be a couple more going by the profile of maturing papers.”

To contact Bloomberg News staff for this story: Zheng Lifei in Beijing at lzheng32@bloomberg.net

To contact the editor responsible for this story: Nicholas Wadhams at nwadhams@bloomberg.net

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