I applaud Communist China’s effort to curb their massive inflation, most in two years according to Bloomberg. Though in my opinion a 25 basis point raise is equivalent to shooting a squirrel with a Daisy bb gun, the squirrel will surely feel it, though it will only piss it off and will continue making a mockery of your tree’s!
Monday im expecting hardly any reaction out of equities, but do expect the metals and the currency markets to move around a bit. Though remember this coming week is still considered holiday trading and the big traders who press the big buttons will
likely still be away from their desks. I for one will be at my desk but i do not have any big buttons to press, just small buttons.
(Bloomberg writes) “The benchmark on year lending rate will rise by 25 basis points to 5.81 percent and the one-year deposit rate will climb by the same amount to 2.75 percent, effective today, the People’s Bank of China said in a one-sentence statement on its website late yesterday.”
Wang Qing, an economist with Morgan Stanley goes on to say:
“This demonstrates how determined the government is to control inflation. Interest rates on medium and long-term loans are adjusted by banks at the beginning of every year so by raising rates now, this will have a much greater tightening effect than it would have in January.”
Cheers and happy Holiday’s….