Global stimulus swells as China eases, ECB to start soon on QE
By Rahul Karunakar and Wayne Cole
BENGALURU/SYDNEY (Reuters) - Global stimulus is swelling, with China cutting interest rates ahead of disappointing factory data and the European Central Bank set to start government bond purchases just as data hints the euro zone economy may be picking up.
Central banks from Switzerland to Turkey, Canada and Singapore have already loosened monetary policy this year and chances are high the Reserve Bank of Australia will cut rates for a second time in as many months on Tuesday.
The People's Bank of China (PBOC) on Saturday cut its benchmark lending and deposit rates, pre-empting official data which showed a second consecutive month of shrinking manufacturing activity.
The European Central Bank will meanwhile start its trillion-euro quantitative easing program this month.
The latest Markit Eurozone Manufacturing Purchasing Managers' Index (PMI) still pointed to only a modest pace of growth across factories in the euro zone but some economists were sounding a bit more optimistic about the future.
The latest PMI held steady at 51.0 in February, slightly below an earlier flash reading of 51.1 and just above the 50 threshold that separates growth from contraction.
"A weaker euro, lower oil prices, better economic environment and accommodative monetary policy should support confidence in the coming months," wrote Apolline Menut, economist at Barclays.
Chris Williamson, chief economist at Markit, also sounded more optimistic, noting that despite a "disappointing headline figure" there were pockets of growth, noting boom times for Ireland. Continued...