Central Bank Will Cut Interest Rates Due To Economic Slowdown

PIMCO, one of the world's largest mutual funds, expects China's economic growth to decline by 100 basis points in the coming year due to the impact of the domestic stock market. The Central Bank of China will therefore intensify its stimulus efforts and continue to cut interest rates and reduce rates. The RMB will continue to decline in the three quarter and its depreciation rate will be as high as 7%.

In the current economic environment, further increase in interest rates may increase the burden on the government to curb capital outflows, and policy support may depend more on financial instruments than on major monetary easing measures.

Taking into account the local government level financing and power bottlenecks, the government has the space to increase fiscal stimulus measures to directly promote infrastructure.

。

Last month's chart of Royal Bank of Scotland showed that the economic growth rate of imports, electricity generation, cement production, new housing construction, railway freight volume, passenger vehicle sales and real estate investment showed much lower economic growth than the average growth rate of rolling average GDP4 months.

Wall Street has seen that the central bank is in a dilemma when the economy is down and capital continues to flow. If the interest rate is raised to raise the renminbi and contain capital outflows, China's exports will lose its foothold in the face of competition from other vulnerable currencies. If China cuts interest rates, capital outflows will intensify, because everyone wants to shake off the impact of the depreciation of the renminbi on purchasing power.

Mark Schwartz, chairman of the Asia Pacific region, said last month that the global market was overheated and that China was undergoing a very normal pformation from a state-controlled, state led system to a more market-oriented system, and that the economy had to slow down.

Goldman still expects China to grow at a rate of 6.8% this year, and the Chinese economy will not have a "hard landing".

Yesterday, PIMCO issued a report that the domestic

The setback will cause China's GDP growth to drop by 100 basis points in the next year.

It is expected that in the next four quarters, China's GDP growth will be lower than 7% in the first two quarters of this year, to 5.5%-6.5%, and the renminbi will fall to 6.8 against the US dollar, down 7% from the level on Wednesday.

The report also predicts that China's private enterprises' capital expenditure and property prices will further weaken, which will affect domestic employment and consumption expenditure. The Central Bank of China will therefore substantially increase the slack, and the total interest rate cut in the future will be 75 basis points, with a reduction of 200 basis points.

In August 11th this year, the Central Bank of China announced the completion of the RMB exchange rate formation mechanism. On the same day and the next day, the central parity of RMB dropped by more than 1000 points. In the third quarter, the RMB dropped to 2.5% against the US dollar.

Asia's currency devaluation has also hit a seven year high.

Bloomberg Morgan chase Asia dollar index fell 4% in the quarter.

PIMCO expects South Korea, Malaysia, Thailand, Singapore and China Taiwan to benefit from depreciation of their currencies.