“The People’s Bank of China (PBOC) has cut interest rates once more in hope to stimulate the economy. The pace of monetary easing has surprised a lot of people, and we were expecting a cut in reserve requirement ratio instead of an interest rate cut. But for the purpose of the current discussion, the form of easing is not the focus here.
Whenever the PBOC eases monetary policy ahead of macro data releases, the market will instinctively believe that the coming macro data releases are going to look ugly, and the latest move triggered more or less the same reaction. Bank of America Merrill Lynch, for instance, advise everyone to “Slightly lower your expectation on June/2Q data”.
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