Yao Wei, an economist at Societe Generale SA, comments on China’s decision to cut interest rates for the first time since 2008.
“This move comes before the weekend release of China’s May data, which might imply negative data surprises.”
“The further liberalization is more significant than the cut itself. Given the new floating band, deposit rates may actually rise to 3.575 percent. The lending rate can move to as low as 5 percent.”
“It is a very strong policy signal in two-fold. One, monetary policy definitely turning more accommodative to restore market confidence. Two, Beijing is not forgetting structural reforms.”