PBOC might cut rates if recovery falters, economist says

05/21/2009 | Bloomberg

The People's Bank of China might be forced to reduce interest rates -- the benchmark one-year lending rate is at 5.31% -- as economic optimism fades, according to Capital Economics. "If the recovery disappoints, further interest-rate cuts could resume from the middle of the year," economist Mark Williams said. China's economic recovery started to stall in mid-April, according to Credit Suisse. However, the Shanghai Composite Index has rallied, adding uncertainty to China's future.

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