By Bloomberg News -
Jun 7, 2012 1:20 PM GMT
brought to you by just victim, jun 7th 2012, 9:34 pm west indonesian of time (wib), via linux ubuntu
china cut borrowing costs for the
first time since 2008 and loosened controls on banks’ lending
and deposit rates, stepping up efforts to combat a deepening
slowdown as Europe’s debt crisis threatens global growth.
The benchmark one-year lending rate
will drop to 6.31
percent from 6.56 percent effective tomorrow, the People’s Bank
of China said on its website today. The one-year deposit rate
will fall to 3.25 percent from 3.5 percent. Banks will get extra
freedom to set the amounts they pay on deposits and charge for
loans in a move UBS AG calls a “milestone.”
European stocks and U.S. index futures extended gains as
China’s move added to an Australian rate cut this week and
expressions of concern from European and U.S. central bank
officials that fanned expectations for more stimulus. The
announcement, two days before China is due to report inflation,
investment and output figures, may signal that the economy is
weaker than the government expected.
“This will be the beginning of a rate cut cycle and there
will be at least one more reduction this year,” said Shen Jianguang, a Hong Kong-based economist with Mizuho Securities
Asia Ltd. “The data to be released over the weekend must be
very weak and inflation must have eased sharply.”
The MSCI All-Country World Index added 0.9 percent at 8:31
a.m. in
new york. The Stoxx Europe 600 Index jumped 1.4 percent,
extending yesterday’s biggest rally in six months, while
Standard & Poor’s 500 Index futures advanced 0.8 percent. Oil
gained 1.4 percent in New York, reversing a 0.6 percent drop.
‘Unprecedented’ Reform
Banks can offer a 20 percent discount to the benchmark
lending rate, the PBOC said, up from a previous 10 percent.
Lenders will for the first time be able to offer savers deposit
rates that are up to 10 percent higher than the official
benchmark rate.
Wang Tao, chief China economist at UBS in
Hong Kong, who
previously worked at the
International Monetary Fund, described
the deposit-ceiling move as “unprecedented” and a “milestone
for interest-rate liberalization.”
U.S. Treasury Secretary
Timothy F. Geithner has pressed
China on the deposit-rate ceiling, calling as recently as April
26 for an increase to help give savers higher returns and stoke
consumer spending. The practice of keeping the deposit rate
below the pace of inflation had forced households to “save
excessively,” he said in a speech in
San Francisco.
Slower Growth
The central bank last reduced benchmark
interest rates in
late 2008, when the government unveiled a 4 trillion yuan ($586
billion at the time) stimulus package to counter the effects of
the global financial crisis. Interest rates have been unchanged
since an increase in July 2011.
Australia’s central bank cut interest rates two days ago,
citing
Europe’s crisis and moderating growth in China. The
European Central Bank yesterday held its key rate at a record
low, with President
Mario Draghi saying that officials stand
ready to act. Today the
Bank of England kept its benchmark at a
record low, while refraining from expanding a stimulus program.
In the U.S., Federal Reserve Vice Chairman
Janet Yellen
said yesterday that the
U.S. economy “remains vulnerable to
setbacks” and may warrant additional monetary stimulus.
Dennis Lockhart, president of the Fed’s Atlanta bank, said extending
Operation Twist, a policy of buying longer-term bonds, is an
“option on the table.”
Lending Cools
In China, today’s move signals policy makers’ concern at
weakness in demand for loans. Three bank officials told
Bloomberg News last month that the nation’s biggest banks may
fall short of loan targets for the first time in at least seven
years as demand for credit wanes.
Caterpillar Inc. (CAT), the world’s largest maker of construction
and mining equipment, says sales in China have lagged behind
expectations, leading to a build-up of inventory.
Industrial output in China, the world’s biggest producer of
steel and cement, probably rose 9.8 percent last month from a
year earlier, close to the slowest pace in three years,
according to the median estimate in a Bloomberg News survey of
27 economists ahead of a National Bureau of Statistics report
due June 9.
Inflation may have moderated to 3.2 percent in May from a
year earlier after a 3.4 percent rate in April, a separate
survey showed, the fourth month consumer prices have risen by
less than the government’s 2012 target of 4 percent.
Manufacturing Slows
China’s manufacturing expanded at the slowest pace in six
months in May, a government report showed on June 1, adding to
signs the nation’s slowdown is worsening. A separate purchasing
managers’ index from HSBC Holdings Plc and Markit Economics
pointed to a seventh straight contraction, the longest stretch
since the global financial crisis.
The PBOC cut banks’ reserve
requirements in November for
the first time in three years, and again in February and May, to
spur lending.
Premier
Wen Jiabao and the State Council, or Cabinet,
pledged last month to place greater emphasis on stabilizing
growth after April industrial production, new loans and exports
were less than economists forecast. The data prompted banks
including Goldman Sachs Group Inc., Morgan Stanley and Bank of
America Corp. to cut their economic-growth estimates.
Expansion may drop to 7 percent or “slightly below” this
quarter from a year earlier, Tao Dong, a Hong Kong-based
economist with Credit Suisse Group AG said last month. Ding Shuang, a Hong Kong-based economist at Citigroup Inc., forecast
7.5 percent. That follows an 8.1 percent expansion in the first
three months of the year, the fifth quarterly deceleration.
Tao said the government may respond with a stimulus of as
much as 2 trillion
yuan, half the size of a package announced in
late 2008 to cushion the economy from the impact of the global
financial crisis.
Even so, the official Xinhua News Agency said in a May 29
article that the government has no intention of rolling out
another “massive” stimulus, damping speculation of more
aggressive policies to support growth.
sumber (source) : http://www.bloomberg.com/news/2012-06-07/china-
cuts-interest-rates-for-first-time-since-2008.html