Food price plunge allows faster Chinese easing
Simon Ward
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China’s “surprise” 25 basis point cut in the benchmark one-year lending and deposit rates today had been signalled by a plunge in market rates and suggests that May data to be released over coming days will show continued economic weakness and a further fall in inflation – see previous post. The latter trend is being driven by a sharp slowdown in the food component, with the post-New Year decline in food costs this year much larger than in 2011 – see chart.
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