Hong Kong (CNN Business)China's central bank is further loosening its purse strings as the country grapples with a slumping economy and a prolonged trade war with the United States. On Wednesday, the People's Bank of China cut its new benchmark lending rates by five basis points. The one-year loan prime rate (LPR) dropped to 4.15% from 4.20% in October. The five-year LPR was cut for the first time since it was introduced a few months earlier, going from 4.85% to 4.8%. The cuts are relatively small, and analysts say further reductions could come as China tries to boost the economy while reining in inflation. The LPR, which banks charge corporate clients for new loans, is a new lending benchmark that China introduced in August and hopes will gradually replace the existing fixed benchmark lending rate. "It's now very evident that Beijing has been stepping up efforts to stabilize growth as top leaders are increasingly concerned," said Ting Lu, chief China economist for Nomura, in a recent … [Read more...] about China is ratcheting up its battle to rescue a slumping economy
Hong Kong (CNN Business)China took more action Friday to boost its economy, reducing the amount of cash banks have to keep in reserve. The People's Bank of China said it would slash the reserve requirement ratio for most financial institutions by 50 basis points. It's the first cut in the ratio in eight months and the move, which takes effect over the next three months, could unleash 900 billion yuan ($126 billion) for long-term lending, the central bank said. China's economic growth slumped to its lowest level in nearly three decades in the second quarter. Industrial production, an important indicator for the country's economy, also posted its worst growth in 17 years. The world's second biggest economy is grappling with fallout from the trade war with the United States, as well as domestic challenges as it tries to rely less on debt to fuel growth. China says it could do more to stimulate the economy after tiny rate cut "By releasing 900 billion yuan, the cuts will … [Read more...] about China takes more action to boost its slowing economy
Hong Kong (CNN Business)China signaled Tuesday that it could take bigger steps to boost its flagging economy after unveiling what amounted to the slimmest of rate cuts on new loans for companies. "There is room for us to cut interest rates," said Liu Guoquiang, the deputy governor of the People's Bank of China, while speaking with reporters in Beijing. "But whether we do it or not depends on the economic growth and price conditions." The central bank will also wait to see what impact an overhaul of monetary policy announced Saturday has on activity. As part of that reform, the PBOC set a new one-year Loan Prime Rate of 4.25% on Tuesday. That's slightly lower than its existing benchmark one-year lending rate of 4.35%, which hasn't changed in years. The LPR, which will become the new benchmark for banks to price loans, is supposed to better reflect changes in market rates, and has been described by some analysts as a rate cut. But the tweak is unlikely to have a huge impact on the … [Read more...] about China says it could do more to stimulate the economy after tiny rate cut
New York (CNN Business)The US economy got off to a rough start this month, with various data pointing at a slowdown. Now economists are saying this trend will only get worse. The National Association for Business Economics said in a survey released Monday that US GDP growth next year will drop below 2% for the first time since 2016. In the previous survey, the consensus expectation for next year was 2.1% — now it has dropped to 1.8%. President Donald Trump promised as much as 4% GDP growth earlier in his presidency, which the economy achieved in the second quarter of 2018. For the year, however, the economy grew by a more modest 2.8%. Although the 54 economists surveyed by NABE don't yet expect a recession, the dour forecast is the latest example that a slowdown is no longer merely an expectation. It's here now, and it's likely to stay. Last week, an Institute for Supply Management report found the manufacturing sector contracted for the second straight month in September. One … [Read more...] about Trump’s election year economy will be much worse than he promised, economists say
The equity benchmark Sensex scaled a new all-time high of 40,816.38 in the morning trade on November 20. Not just the Sensex, even the Nifty has been rallying at a time when concerns over the Indian economy are growing, with macroeconomic data pointing to a slowdown.Why is the market behaving differently from the economy?"Markets usually run ahead of macros and price future growth. There are three positive indicators for growth – reduction in the corporate tax rate, proposed divestment of large public sector units and a possible resolution of the US-China trade impasse. Therefore, we see growth coming back in 2020. Now, we expect broader markets to outperform," said Sanjiv Bhasin, Director, IIFL Securities.Close Experts and brokerages are of the view that the market is factoring in a recovery in the economy. related news The role of P/E multiple in deciding investment returns Sensex hits a new high, 4 factors that could be fuelling optimism Hot Stocks: Short-term trend … [Read more...] about Economy in stress and markets on a high; time to be careful?