Tuesday, August 25, 2015

China Cut Lowers Interest Rates and Reserve Requirements

News
The People's Bank of China (PBOC) interest rates 25 basis points for the fifth time since November and lowered the amount of cash banks must set aside. While this may be a token move, it suggests the Chinese recognize the growing strain of dollar borrowing and the return of cash to Hong Kong. This unexpected interest rate cut and lowering of the reserve requirement supports the risk-on trade at least temporarily.



Headline: China Cuts Interest Rates for Fifth Time in Bid to Stem Rout

China’s central bank cut interest rates for the fifth time since November and lowered the amount of cash banks must set aside, stepping up efforts to stem the biggest stock market rout since 1996 and a deepening economic slowdown.


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