Daily update
Daily update
- The decision of the People’s Bank of China to cut rates by 0.1 percentage point was perhaps inevitable—even on official data, the domestic economy is lethargic. Does a small change in borrowing costs really alter anything? Arguably, China is not constrained by the cost of credit. This is a signal of policymakers’ concerns over economic growth, and perhaps represents a downpayment on future action.
- US President Biden’s decision not to seek re-election is dominating the media. It is worth reiterating that politicians matter less to economies than they think (economists, of course, matter more). US House Speaker Johnson endorsed Vice President Harris to become the 47th US President (by calling on President Biden to resign immediately, which seems unlikely).
- Markets react if policy probabilities change. What matters therefore is: who the Democrats pick as candidate; whether that choice significantly changes policy proposals (unlikely); whether the probabilities for the presidential and congressional elections change. It will take time to get information on any of these points.
- Friday’s technology outage is a reminder that technological advances do not always make everything more efficient. Time and effort will be spent trying to ensure this is not. Technology should enhance productivity overall (otherwise we would not use it), but some sectors may become less efficient.
