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.”
““香港中環交易廣場 Exchange Square, Central, Hong Kong” / 城市建築夜之形 Urban Architecture Forms at Night / SML.20130209.7D.21836.P1.L1.BW” by See-ming Lee (SML) is licensed under CC BY 2.0
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