Kevin Lai, an economist at Daiwa Capital Markets, comments on China’s decision to cut interest rates for the first time since 2008.
“This was a response to what’s going on in Europe and the slowdown in China. There should be more cuts to the required reserve ratio and relaxation on credit policy. We expect them to do more in terms of monetary easing, credit policy and not so much about fiscal stimulus.”
“The macroeconomic environment is not exactly the same as it was in 2008, 2009. Jobs are still doing well, so there is no rush for the government to come up with more stimulus at this point.”
“The risk is still on growth being on the downside, so they will try to minimize that risk. I don’t think there is a huge concern about inflating the property bubble at this stage.”