The rate cuts come as Wall Street banks, including Goldman Sachs, slash their forecasts for China’s economy. Goldman said on Sunday that the recovery sparked by the country’s post-Covid reopening appeared to have “fizzled out” in the second quarter as it downgraded its forecast for growth this year to 5.4% from 6%. The People’s Bank of China on Tuesday trimmed its one-year loan prime rate by 10 basis points from 3.65% to 3.55%, and reduced the five-year rate by the same margin to 4.2%.
They underperformed other markets in the region. “This move is in line with our expectations, but might be disappointing for some forecasters who expected a deeper cut of at least 15 [basis points] to the 5-year LPR,” Goldman Sachs analysts wrote in a note on Tuesday. “We continue to expect further policy easing measures to be announced in the next few weeks, especially on fiscal, housing and consumption, although the magnitude of stimulus should be smaller than in previous easing cycles.
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