China Cuts Key Rate, Reserve Ratio To Aid Economy Hit By Tariffs

Central Bank

Economic

Summary:

China reduced its policy rate and lowered the amount of cash lenders must keep in reserve, as Beijing ramps up efforts to help an economy caught in a second trade war with the US.

The People’s Bank of China cut the seven-day reverse repurchase rate to 1.4% from 1.5%, according to governor Pan Gongsheng. The central bank will also trim the reserve requirement ratio by half a percentage point, Pan said at a briefing on Wednesday, without specifying when that would be effective.

The steps aim to guide borrowing costs lower and are among the 10 measures outlined by Pan, which also include rate reductions on a slew of relending tools and loans for policy banks. The RRR cut will release about RMB1 trillion (RM586.94 billion) in long-term liquidity, Pan said.

The offshore yuan trimmed its advance to trade little changed at 7.2 per dollar, while the 10-year government bond yield edged lower.

The central bank last reduced its policy rate and the reserve requirement ratio in September after Pan unveiled an array of aggressive measures to put a floor under China’s growth slowdown.

Pan also announced:

- The central bank will set up a RMB500 billion relending tool for consumption and elderly care.

- It will also increase its technology relending fund by RMB300 billion.

- Plans to increase its agriculture, small and medium enterprises relending fund

The decisions demonstrate officials are acting with urgency to support the world’s second-largest economy in the face of the US-China trade war. Expectations that Beijing would unleash more stimulus have risen after US President Donald Trump imposed up to 145% tariffs on Chinese imports, a level economists say would decimate bilateral trade.

“Today’s announcement reflects an orchestrated effort to not only support liquidity but to stimulate the broader market and economy,” said Frances Cheung, managing director and rates strategist at Oversea-Chinese Banking Corp Ltd. “Having a more resilient economy would also be a card to play in the face of tariffs.”

Source: Theedgemarkets

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

You understand and acknowledge that there is a high degree of risk involved in trading. Following any strategies or investment methods may lead to potential losses. The content on the site is provided by our contributors and analysts for information purposes only. You are solely responsible for determining whether any trading assets, securities, strategy, or any other product is suitable for investing based on your own investment objectives and financial situation.

Add to Favorites

Michelle Reid

Economic

China–U.S. Trade War

Key Points:

● Talks address tariffs, economic strategies, and potential impacts on markets.

● First official dialogue between US and China since tariff increases.

● Global trade markets await outcomes impacting international policies.

China and US Engage in Economic Talks Amid Trade Tensions

He Lifeng leads the Chinese delegation to Switzerland for economic dialogue with US Treasury Secretary Scott Bessent, scheduled from May 9-12. China-US economic talks aim to address escalating trade tensions affecting global markets.

He Lifeng, a key Chinese official, is leading China's delegation to Switzerland, marking the first official engagement since recent tensions. The talks, held from May 9-12, involve US Treasury Secretary Scott Bessent and aim to address the ongoing trade conflict that has resulted in significant tariffs.

China's stance is clear: while the doors remain open for dialogue, any discussions must be based on mutual respect and equality. Both nations have endured economic impacts, with tariffs affecting trade flows and market activities. The meeting could potentially ease tensions and result in adjustments to existing tariff policies.

Market observers and financial analysts are closely watching these developments. Statements from both parties have emphasized the importance of achieving a fair basis for trade negotiations, highlighting the need for balanced economic measures. As He Lifeng stated, "Vice Premier He, as the Chinese lead person for China-U.S. economic and trade affairs, will have a meeting with the U.S. lead person Treasury Secretary Scott Bessent."

Historical Trade Dialogues and Economic Analysis

Did you know? In 2018, China responded to US tariffs on steel with its own levies, impacting 128 American product categories.

Historically, US-China dialogues have experienced shifts, notably the end of the Joint Commission on Commerce and Trade in 2016. The renewal of talks reflects attempts to stabilize bilateral trade and address broader economic issues. Expert analysts suggest that a positive outcome could reignite investment interests and adjust trade practices.

Economic analysts point to the need for strategic adjustments in trade policies to prevent further market disruptions. Historical trends suggest that prolonged tariff impositions have negatively impacted both economies. Financial markets are assessing potential outcomes, with attention to changes in taxation and economic alliances.

Source: CryptoSlate

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

Manuel

Economic

China–U.S. Trade War

The U.S. and Britain have made good progress in negotiating a trade deal that would likely include lower tariff quotas on steel and autos, a UK official said on Tuesday, but the timing of a deal remains in doubt amid conflicting signals from U.S. Treasury Secretary Scott Bessent and President Donald Trump.

Bessent told lawmakers earlier on Tuesday the Trump administration could announce trade agreements with some of the largest U.S. trading partners as early as this week. But later Trump told reporters before a meeting with Canadian Prime Minister Mark Carney that he and top administration officials will review potential trade deals over the next two weeks to decide which ones to accept.

Since Trump announced a 90-day hiatus from stiff "reciprocal" tariffs he had aimed at dozens of trading partners, he and his top officials have engaged in a flurry of meetings with trading partners to secure deals before the pause ends in early July.

U.S. and British officials engaged in "good discussions" remotely over the weekend and in person this week on a range of issues, but it was too soon to say when a deal could be finalized, a UK official said.

"There's a landing zone," the official said. "We've had good discussions this week."

The talks, led on the U.S. side by officials from the U.S. Trade Representative's office and the Commerce Department, were expected to result in lower-tariff quotas for steel and autos, with talks still continuing about the UK digital services tax.

A second source familiar with the talks said the situation was encouraging, but still fluid.

Britain was not expected to change its phytosanitary standards which have precluded the import of some U.S. meat products, but U.S. officials understood there was little demand for those products in Britain at this point. A second source familiar with the talks said the situation was still fluid.

A UK government spokesperson said talks on an economic deal between the U.S. and the UK were ongoing, but declined to set any timelines for agreement. "We will continue to take a calm and steady approach to talks and aim to find a resolution to help ease the pressure on UK businesses and consumers," they said.

Source: Reuters

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

Patricia Franklin

Political

India early on Wednesday said its armed forces had conducted strikes against Pakistan and what it calls Pakistan-occupied Jammu and Kashmir, targeting "terrorist infrastructure."

"Our actions have been focused, measured and non-escalatory in nature. No Pakistani military facilities have been targeted," the country's Ministry of Defence said.

The operation follows a militant attack in Pahalgam, Jammu and Kashmir, in which 26 people were killed last month.

"We are living up to the commitment that those responsible for this attack will be held accountable," the statement said, while adding that India had shown "considerable restraint in selection of targets and method of execution."

The Defence Ministry said it will hold a detailed briefing on the strikes, labeled "Operation Sindoor," later in the day.

"Pakistan has every right to give a robust response to this act of war imposed by India, and a strong response is indeed being given," Pakistan's Prime Minister Shehbaz Sharif said, according to AP.

Source: CNBC

Risk Warnings and Disclaimers

Add to Favorites

Manuel

China–U.S. Trade War

Economic

Top U.S. officials are set to meet with a high-level Chinese delegation this weekend in Switzerland, the administration announced Tuesday, in the first major talks between the two nations since President Donald Trump sparked a trade war with stiff tariffs on imports.

Treasury Secretary Scott Bessent and trade representative Jamieson Greer will meet with their counterparts in Geneva in the most-senior known conversations between the two countries in months. It comes amid growing U.S. market worry over the impact of the tariffs on the prices and supply of consumer goods.

Trump had claimed previously that the U.S. and China were holding negotiations on lowering tariffs, which Beijing has denied, saying Trump must first lower his stiff tariffs. Bessent earlier Tuesday testified to a House committee that the U.S. and China “have not engaged in negotiations” but “as early as this week,” the U.S. will be announcing trade deals with some of the U.S.′ largest trading partners.

The Chinese Commerce Ministry on Tuesday confirmed the meeting between the vice premier and Bessent in Switzerland.

“The Chinese side carefully evaluated the information from the U.S. side and decided to agree to have contact with the U.S. side after fully considering global expectations, Chinese interests and calls from U.S. businesses and consumers,” said a ministry spokesperson.

Bessent and Greer also plan to meet with Swiss President Karin Keller-Sutter, according to readouts from their respective offices.

Both Greer and Bessent have had communications with their counterparts prior to the start of the trade war.

Greer told Fox News Channel last month that he spoke with his Chinese counterpart for over an hour before the trade war started. “I thought it was constructive,” he said, adding, “this is not a plan just to encircle China. It’s a plan to fix the American economy, to have a greater share of manufacturing as GDP, to have real wages go up, to be producing things instead of having an economy that’s financed by the government.”

And Bessent in February spoke with Chinese Vice Premier He Lifeng “to exchange views on the bilateral economic relationship,” according to a Treasury news release.

Source: AP

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

Manuel

Cryptocurrency

Bitcoin (BTC) tightened its grip on the crypto market on Tuesday, with dominance surging to fresh four-year high as crypto traders rotated into the market’s anchor asset ahead of tomorrow's key Federal Reserve policy meeting.

BTC held steady around the $94,000-$95,000 area, up a modest 0.4% over the past 24 hours and extending a tight-range trading pattern that has persisted since the weekend.

Meanwhile, the broad-market CoinDesk 20 Index slipped 0.7% lower, with Ethereum's ether (ETH), and native tokens of Sui (SUI), Aptos (APT) and Polygon (POL) dragging the benchmark lower. Bitcoin Dominance Soars Ahead of FOMC as Volatility Burst Looms_1

Bitcoin Dominance Soars Ahead of FOMC as Volatility Burst Looms_1

A check on traditional markets showed stocks booking back-to-back losses, with the S&P 500 and the tech-heavy Nasdaq closing 0.7%-0.8% down, once again underperforming BTC.

Despite the lack of major price action, focus has increasingly turned to bitcoin’s growing share of the overall crypto market: The so-called Bitcoin Dominance metric surpassed 65%, its highest reading since 2021 January, according to TradingView data, signaling capital consolidating into the asset perceived as the most resilient in the face of macroeconomic uncertainty. Bitcoin Dominance Soars Ahead of FOMC as Volatility Burst Looms_2

Bitcoin Dominance Soars Ahead of FOMC as Volatility Burst Looms_2

Joel Kruger, market strategist at LMAX Group, described the current landscape as one of pause and anticipation. "The cryptocurrency market has remained largely stagnant since the weekly open, with prices settling into a holding pattern as investors await a pivotal catalyst," he noted. "This impetus may arise from traditional markets, driven by updates on tariff-related economic impacts or the Federal Reserve’s anticipated FOMC decision on May 7."

The Federal Reserve is widely expected to hold interest rates steady, according to the CME FedWatch Tool, but traders are on edge for any shift in Fed Chair Jerome Powell's tone that could impact risk appetite.

Bitcoin volatility burst on the horizon

With bitcoin's recent price action being extremely flat, the upcoming FOMC meeting "is rigged to cause significant volatility," said Vetle Lunde, head of research at K33. He noted in a Tuesday report that BTC's short term volatility is "abnormally compressed," with the 7-day average dropping to the lowest level last week in 563 days.

"Such low volatility regimes in BTC tend to be short-lived," Lunde said. "Violent volatility outbursts typically follow this form of stability once prices start to move, as leveraged trades are unwound and traders are reactivated into the market."

He said that a significant cascade lower is unlikely, as funding rates for perpetual swaps are consistently negative. Similar periods historically offered good buying opportunities for medium and long-term investors, Lunde added, favoring "aggressive spot exposure" ahead.

Source: Coindesk

Risk Warnings and Disclaimers

Add to Favorites

Manuel

Political

Commodity

Multiple loud explosions were heard in several places in Pakistan and Pakistani Kashmir on Wednesday as India said it had attacked "terrorist infrastructure" in nine sites and Pakistan vowed to respond to the attacks.

After the explosions, power was blacked out in Muzaffarabad, the capital of Pakistani Kashmir, witnesses said. It was not immediately clear what the explosions were.

"A little while ago, the Indian armed forces launched ‘OPERATION SINDOOR’, hitting terrorist infrastructure in Pakistan and Pakistan-occupied Jammu and Kashmir from where terrorist attacks against India have been planned and directed," the Indian government said in a statement.

"Our actions have been focused, measured and non-escalatory in nature. No Pakistani military facilities have been targeted. India has demonstrated considerable restraint in selection of targets and method of execution," it said.

A spokesman for Pakistan's military told broadcaster ARY that India had attacked Pakistan with missiles in three places and that Pakistan would respond.

The development comes amid heightened tensions between the nuclear-armed neighbours in the aftermath of an attack on Hindu tourists in Indian Kashmir last month.

India blamed Pakistan for the violence in which 26 men were killed and vowed to respond. Pakistan denied that it had anything to do with the killings and said that it had intelligence that India was planning to attack.