It also said it will maintain credit support for the economy, a day after media reports of Beijing preparing a package of measures worth $278 billion to stabilise a slumping stock market.
Hong Kong’s benchmark index soared over 3% and the yuan hit its highest since Jan. 12 but was largely steady against the dollar in offshore markets.
Chinese stocks, while up over 1% on Wednesday, are down over 4% this month and set for their worst performance since August.
Yet a heavy dose of scepticism remains as to whether a rate cut, anticipated by many analysts, will be enough to shore up sentiment in the longer term, with some emphasising the need for the more targeted measures.
U.S.-based Yardeni Research believes China is at the start of a “major debt crisis.” It notes Chinese bank loans have soared eightfold by $28 trillion since December 2008 to $33.4 trillion last month. In contrast, U.S. bank loans have doubled to $12.3 trillion over the same period, it says.
Speaking of the U.S. economy, Wednesday brings the release of the S&P Global PMIs, with ING pointing out that markets have become gradually more sensitive to the U.S. survey, even though the ISM index remains a key reference.
In Europe, preliminary PMI data has shown a downturn in euro zone business activity eased this month, but an improvement in the manufacturing outlook was partly offset by a steeper decline in the bloc’s dominant services industry.
Later in the day, the Bank of Canada is expected to leave its key rate unchanged, but stubborn inflation has markets delaying the timeline for the first rate cut in almost four years.
Any hawkish commentary from Canada’s central bank could reinforce the view that big central banks such as the U.S. Federal Reserve are likely to move later than markets anticipated on monetary easing.
