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Effective April 20th. China goes into Stimulus Mode



April 19, 2015 – Comments (0) | RELATED TICKERS: FXI , UCO , DOG

Its official now.

 China Shifts Into Stimulus Mode With Cut to Banks’ Reserve Ratio

 China’s leaders swung into stimulus mode, cutting the amount of cash lenders must set aside as reserves by the most since the global financial crisis just days after a report showed the slowest economic growth in six years.

The reserve-requirement ratio will be lowered 1 percentage point effective April 20, the People’s Bank of China said on its website Sunday, the second reduction this year and the largest since November 2008. The level will decline to 18.5 percent, still high by global standards, based on previous statements.

The move puts China more firmly in the easing camp with the European Central Bank and the Bank of Japan and follows a vow by Premier Li Keqiang last month to step in if the economy’s slowdown hurts jobs as well as PBOC Governor Zhou Xiaochuan’s weekend comment that China has room to act. The cut will allow banks to boost lending, unleashing about 1.2 trillion yuan ($194 billion), and may spur another leg higher in the nation’s booming stock market.

“This RRR cut is much bigger than the market anticipated and banks will be flooded with liquidity,” said Liu Li-Gang, chief China economist at Australia & New Zealand Banking Group Ltd. in Hong Kong. “It will also add fuel to the already red hot stock market.”


So much for the one day crash in Chinese stocks.

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