Economic Struggles in China and Greece
- Chinese authorities sprang into action just a few days after announcing a disappointing first quarter GDP growth rate. The People’s Bank of China (PBOC) last night reduced the banks’ reserve requirement by 1% to 18.5% with the intended goal of free, loanable funds in the banking system in order to stimulate the economy. It was not the first move by the Chinese central bank to support the economy: Just a few weeks ago, the PBOC slashed the required down-payment for purchasing a home; we expect more action to come. The benchmark one-year lending rate currently stands at 5.35% after two cuts in November and February; we anticipate an additional cut soon. The speed and size of the Chinese authorities’ response betrays serious concerns about the state of the economy.
- Growth at 7%, as recorded in the first quarter, just sits at target level for the year, leaving no margin of error for the rest of the year if growth fails to reaccelerate Read More