PBOC starts easing

The WSJ reports that China has lowered the 1yr lending rate 25bps to 6.31%. I think that this is very significant – and a material boost to my growth outlook.

Relative to my baseline, this will boost Aussie exports, and therefore the AUD.  The AUD has rallied somewhat, and bond futures have sold off ~5bps on the news.

I had not expected any true Chinese easing until 2013 – i regard the RRR cuts as an endogenous response to the smaller current account surplus.

This is a BIG development.

Advertisements
This entry was posted in Uncategorized. Bookmark the permalink.

please comment

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s