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.”