Moments ago, as traditionally is the case, the Chinese central bank caught the world by surprise and cut rates, notably the deposit rate by 25 bps and the lending rate by 40 bps.
According to the press release posted moments ago (google translated):
The People’s Bank of China decided to cut financial institutions RMB benchmark interest rate loans and deposits with effect from November 22, 2014. The one-year benchmark lending rate down 0.4 percentage points to 5.6%; one-year benchmark deposit rate down 0.25 percentage point to 2.75%, while the combination of market-oriented reforms to promote the interest rate, the upper limit of the floating range of interest rates on deposits of financial institutions by the benchmark deposit 1.1 times the adjusted interest rate is 1.2 times; other grades adjusted accordingly benchmark interest rate loans and deposits, and to make appropriate benchmark interest rate maturities degenerate.
The summary table:
This happens as many analysts had been calling for more easing from China for months to help stabilize the faltering economy, but also happens a day after as Bloomberg reported, “Distressed Debt in China? Ain’t Seen Nothing, DAC Says.” Bascially well over a year after promising deleveraging reforms and a lower trendline growth rate, one which would not see incremental monetary stimulus, Xi Jinping threw in the towel and joined Japan and Europe in aggressively pursuing greener grass. It also means that, as expected, China is now clearly paying attention to Japan’s unprecedented currency destruction and as Albert Edwards noted a few weeks ago, it is now only a matter of time before China devalues its currency outright.
The good news for the liquidity addicts, is that the S&P futures are now 12 points higher on what is clearly the only growth strategy left in a centrally-planned world, and are approaching 2070 and just 30 points away from Goldman’s 2015 year end target.!
via Zero Hedge http://ift.tt/14WbCuF Tyler Durden