Today, China announced its largest interest rate cut in 11 years to encourage borrowing as well as its support of a multibillion-dollar stimulus package to boost slowing economic growth. Jing Ulrich, chairwoman of China equities for JP Morgan & Co., stated, “This is the most aggressive monetary easing in recent years and should bode well for China’s market performance.”
This interest rate cut is the fourth cut made in the last three months and is several times larger than the other three cuts as they were only 0.27 percentage points. Even with the large cut, Ulrich believes the effectiveness will depend on whether banks increase their lending to the most troubled sectors of the economy.
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