Wednesday, October 29, 2008
G20 goes under the knife once again...
Cut, cut and cut again. This is as much an exercise in placation as it is masterful economic policy.
As the FED has cut yet again, China lowers their own loan rates to a somewhat appropriate number given the proximity to the U.S. Halloween celebrations.
The world is digesting the events and policies of the past six months, and it it apparent that most G20 countries (ex the Anglo-American financial axis, which are executing Keynesian prescriptions at light speed with draconian lack of due process or a scintilla of understanding by our political leaders) have no idea how to stoke domestic demand even with an improving trade gap via the rapidly strengthening dollar.
However, lower rates are not necessarily "expansionary".
BEIJING, Oct 29 (Reuters) - China's central bank cut banks' benchmark lending and deposit rates by 0.27 percentage point on Wednesday, the third cut in six weeks.
The cost of one-year bank loans will fall to 6.66 percent from 6.93 percent, while the benchmark one-year deposit rate falls to 3.60 from 3.87 percent, the People's Bank of China (PBOC) said.
The cut in interest rates takes effect on Thursday, the central bank said on its website (www. pbc.gov.cn).
The PBOC gave no reason for the easing.