China’s Loan Prime Rate (LPR) cuts on Monday – is the glass half full, or half empty?

On Monday the People’s Bank of China lowered rates:

• China cuts 1 and 5 year rates by 25bp each, as expected

China’s central bank lowered the reference rates for personal and business mortgages, a move that was widely anticipated.

On the positive side, this highlights the government’s commitment to providing substantial economic support. However, a more negative interpretation suggests that lowering borrowing costs may not address the core issue of weak domestic demand, with greater efforts needed to alleviate concerns about the future.

Which take do you prefer? I am in the less optimistic camp. It’ll take fiscal moves, not just pushing on a string rate cuts.

This article was written by Eamonn Sheridan at www.forexlive.com.