China to Reduce Interest Rate
The Chinese central bank has recently made claims to reduce the national interest rates in the country.
This is in a bid to boost the slow growth of the economy amidst the trade war with the USA.
This is in a bid to boost the slow growth of the economy amidst the trade war with the USA.
The People's Bank of China in a statement said “We must spare no effort to improve monetary policy
transmission and insist on market-oriented reforms to promote a noticeable decline in real interest rates”
transmission and insist on market-oriented reforms to promote a noticeable decline in real interest rates”
It is believed that if the interest rates are reduced it will serve as an incentive to private businesses to
expand their businesses or to invest in other businesses which would hopefully boost productivity thereby
strengthening the economy
expand their businesses or to invest in other businesses which would hopefully boost productivity thereby
strengthening the economy
https://www.scmp.com/economy/china-economy/article/3030820/chinas-central-bank-eyes-noticeable-decline-interest-rates
The trade war with USA has definitely created a lot of instability and uncertainty making investor confidence low. This may work well for China since along with stimulating private domestic investment, a lower interest rate will also attract more foreign investment. Seeing how this trade war is only forecasted to get worse, this is a good proactive measure by the Chinese central bank.
ReplyDeleteI wonder if this decision from China will have enough of an impact on the global interest rate (r*) to influence the United States to influence the United States to send money overseas, and once again simulate trade more freely between the two countries.
ReplyDelete