China Cuts Key Interest Rate to Battle Deflation Risks, But Impact Uncertain
• China cuts 5-year loan prime rate to combat deflation, potentially helping real estate sector • But rate cut may be too little, too late given broader economic malaise and weak consumer spending • Deflationary spiral looms if consumers expect lower prices and curb spending further • China finally waking up to deflation threat, but more fiscal and monetary stimulus likely needed • Coming months critical to assess impact of rate cut and whether more measures warranted before too late