China’s growth slows, spurring stimulus

While the markets are reacting positively to news that Europeans, North American and Japan’s central banks have made dollar swaps cheaper, less attention is being paid to a move by Chinese authorities to loosen monetary policy.

China has reduced the amount of reserve capital it requires its banks to hold with the central bank, cutting the reserve rate by 50 basis points. Many weren’t expecting China to loosen monetary policy again before the new year.

While the move should free up billions of dollars, it’s being taken as a sign that Beijing is less than confident in the country’s growth.

One UBS economist told the Financial Times that growth in China could fall to 7.7% in the first quarter of 2012.

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.