China's Weekend Rate Cuts Worrisome, But Long Term Money Not Giving Up
Mar 3, 2015 @ 11:11 PM
Usually, stock market investors like interest rate cuts. But Saturday’s decision by the People’s Bank of China (PBoC) to lower interest rates is really a downer, says Craig Botham, an emerging markets economist at Schroders, a London-based investment bank with $447.7 billion in assets under management.
“We are open to persuasion on the topic, (but) it is hard to see this as especially positive for growth,” he says in a post on the firm’s website Tuesday morning. “It reduces the risk of corporate defaults for a year or so, but will probably weigh on growth via more expensive credit after that point. China could be facing a similar faulty transmission mechanism problem to the one that the eurozone has had to deal with.”