China Slashes Lending Rates Again, One Week After Surprise Cuts in Key Rates
"Fresh monetary easing/stimulus was seen as futile as 'flogging a dead horse,' given that China's economy desperately needs consumers back on the streets spending money," he said in a note.
In relation to the latest round of cuts, David Chao, global market strategist for Asia Pacific at Invesco said it hinted at the seriousness of the property market downturn."It sends a strong message that policymakers are willing to take more forceful actions to stabilize the ailing market," he said in a note.
"Though the LPR cut may provide near-term relief, easing liquidity alone is unlikely to lead to a turnaround to the property market." He added that lower mortgage rates haven't translated into higher property sales so far,"due to the lack of confidence in large developers and the presales model." Chao said he doesn't expect these to be last of the monetary policy fixes to come from the Chinese authorities, especially when"central and local governments have the financial tools to provide an excess of 3 trillion yuan to boost the property sector."
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