Daily update
Daily update
- China’s central bank cut interest rates and reserve requirements, eased home ownership regulation, and proposed support for equity markets. The measures were announced with considerable dramatic effect, presumably aiming to ensure China’s officially reported GDP data meets the official GDP target.
- A challenge of having been a Japanese economist in the early 1990s is seeing parallels to Japan’s policy errors from that time. China’s moves will give more money to mortgage holders, and by supporting asset prices may create a positive wealth effect. However, the policy measures also seem to mimic what worked in the past rather than adapting to today’s very different economic circumstances. Economists are skeptical about whether these policies are best suited to changing an economy with a high precautionary savings rate and declining population.
- The German ifo poll of business confidence is due, following yesterday’s assorted business sentiment polls. Needing to find content for a daily podcast, it is sometimes tempting to look into these surveys simply to have something to say. It is a temptation best resisted.
- The US has the Conference Board consumer confidence poll. The improvement in the Michigan sentiment poll was entirely due to Democrats’ optimism. Democrats might be uniquely living in a better economy; more likely it represents political polling.
