People's Bank of China just announced its decision to cut benchmark deposit interest Rate by 0.25% and loan interest rate by 0.4% starting from 22nd November onward. This is popularly interpreted as an asymmetric interest cut and is triggered by Friday's unexpected bearish treasury bond futures market.
To prevent market panic and stimulate the economy in the last quarter of 2014, PBoC has eventually corresponded to economists' appeal and taken concrete measure to lower financing costs. The interest cut will also favor China's housing market that has been sluggish since March this year to provide more and cheaper housing loans to the family who were just given permission to apply for housing mortgage since 30th September.
More monetary stimulus, such as lowering the reserve ratio and canceling the loan-to-deposit ratio, are expected for the PBoC to implement, should China's economy still fall far below its 7.5% growth target.
★PBoC to Cut RMB Benchmark Deposit and Loan Interest Rate on 22nd November★
