Following the unexpected interest rate cut by the Australian dollar on the 7th, South Korea became the latest country to join the interest rate cut yesterday. Earlier, India and the European Union have announced interest rate cuts. The United States continues to maintain low interest rates, while Japan maintains zero interest rates for a long time. In just one week, the world’s four central banks have taken interest rate cuts, which means that a new wave of global interest rate cuts has already surged. The resurgence of quantitative easing has left China in a dilemma of follow-up. Yesterday, with the release of economic data in April, the rumors of the central bank's interest rate cuts were rampant. It is reported that China may have a rate cut in the near future. However, some insiders also said that the central bank just restarted the issuance of central bank bills yesterday, and it is difficult to cut interest rates in the short term.
Can the global interest rate cuts reverse the economic downturn?
Yesterday, the interest rate decision announced by the Bank of Korea showed that it would cut the benchmark interest rate by 25 basis points to 2.50%. This is the country that announced the cut in the benchmark interest rate this week after the Reserve Bank of Australia announced the interest rate cut on Tuesday.
Earlier, the EU and India announced interest rate cuts on May 2 and 3, respectively. The Fed publicly stated at the monetary policy meeting last week that it is not only impossible to cut QE in the future, but it is likely to increase further. And Australian Prime Minister Gillard mentioned that the European Central Bank is considering the implementation of negative interest rates, a new round of global interest rate cuts.
On the evening of Beijing time yesterday, the Bank of England also announced a monetary policy decision to maintain a low interest rate of 0.5%.
Some analysts believe that all countries aim to boost economic recovery by cutting interest rates and reverse domestic economic shackles, but the interest rate cuts triggered by them have aggravated countries' concerns about their currency exchange rates. Therefore, some professionals are not optimistic about the prospect of this round of interest rate cuts. HSBC Global Chief Economist Stephen Jinen said that the new round of easing policy "does not cure the symptoms", the central bank issued this "painkiller", short Time may work to reverse the market trend, but whether it can reverse the economic downturn requires a big question mark. He said that rather than the ability of the central bank to promote economic recovery, it is better to say that it is the ability to create a financial bubble, and that "the bubble is usually a prelude to economic collapse."
Whether China is facing a dilemma
In the new round of interest rate cuts, China's movements have been receiving much attention. Earlier, a number of experts and market analysts told the Yangyang reporter when they talked about the RMB exchange rate and the "hot money" issue. The new round of quantitative easing, China has problems with or not.
Yesterday, with the release of economic data in April, rumors about domestic interest rate cuts reappeared. Some even said that the central bank will have a rate cut action in recent days, and the policy tone has returned to easing. However, there are also reports that on the 9th, the central bank restarted the central bank after 17 months, and announced the issuance of a 10 billion yuan three-month central bank bill. It is unlikely that interest rates will be cut in a short period of time.
According to the National Bureau of Statistics, the CPI rose by 2.4% in April and the PPI fell by 2.6%. In this regard, Sun Lijian, deputy dean of the School of Economics of Fudan University, commented on the data, "China's interest rate cut window will open." He believes that the rise of CPI may be affected by substitution factors, quarterly and hike factors, but the decline of PPI is due to the appreciation of the US and Japan's monetary easing, resulting in an increase in the actual capital cost of enterprises and a deterioration in competitiveness. At the same time, the property market regulation and photovoltaic industry Excessive investment leads to insufficient investment willingness.
Teng Tai, dean of the Wanbo Economic Research Institute, said that there is no problem with CPI at present. Inflation is no longer a major contradiction. Instead, "there is a problem with growth, PPI continues to be negative, and private investment confidence is insufficient." He agreed that the interest rate cut should be cut as soon as possible to reduce the inflow of hot money and boost investment confidence.
However, for China, the interest rate cut may be a "double-edged sword". On the one hand, interest rate cuts can block hot money and boost the economy, but on the other hand, it is not conducive to domestic real estate regulation and economic restructuring. Lian Ping, chief economist of Bank of Communications, said that the economic growth rate in the first quarter was higher than the annual target. The investment and consumption in the second quarter will improve, and there seems to be no need to cut interest rates to stimulate growth.
"In the second half of the year, affected by the disintegration of the epidemic, CPI may go higher, interest rate cuts will lead to negative interest rates; foreign exchange accounts will increase significantly, liquidity will be looser, central banks will resume central bank bills, and interest rate cuts will be reversed." Lian Ping also believes that housing transactions It has shrunk significantly, house prices will stabilize, and interest rate cuts will change the existing trend.
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