Analysts are lining up to call rate cuts from various central banks in the wake of Brexit
In a nutshell, the argument is that the vote will trigger lower global GDP growth in the short term (at least), and thus a policy response.
Just focusing on China - how, or will, the People's Bank of China respond?
- A slowdown in Europe will be another headwind for China
- Despite all the efforts at economic transisiton, exports play a major role in growth in China
- Estimates say that a 1% fall in growth in Europe will translate to around a 7% fall in exports from China, and a 0.2% cut to GDP growth there
The PBOC has already responded to the vote by setting the yuan (against the USD) at its lowest since December of 2010 (along with a big liquidity injection into yesterday)
Will they cut the RRR, and/or rates too?