Quick Thoughts on the Actions From China

August 25th, 2015 10:37 am | by John Jansen |

Via Robert Sinche at Amherst Pierpont Securities:

A quick early note as just after 6am China/PBOC announced both a 25bp cut in the 1-year lending (to 4.6%) and 1-year deposit (to 1.75%) rates and a ½ percentage point cut in the RRR. While my memory far from perfect, this is the first time I believe the PBOC made a change to official rates and an adjustment to the RRR at the same time. Also, the Chinese authorities have apparently ended support for equity prices this week, according to a Bloomberg story, suggesting that they are shifting from direct support for equity prices (Wall Street) and instead are focusing on broader support for the economy (Main Street) through monetary policy actions. Sounds like a wise policy shift to me…less direct intervention in supporting particular stock prices and instead supporting the broader economy.

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