China’s unexpected rate cut and economic slowdown plunge oil prices

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Crude oil prices fell on Monday after China’s central bank unexpectedly cut interest rates.Data showed a general slowdown in economic activity, including consumer spending and factory production, in July, with global It has reignited fears of an economic recession.

With signs of a further cooling in China, the world’s second-largest economy, and already undermined by China’s coronavirus-free policy and property crisis, energy markets are on high alert. The prospect of weaker demand led to a 5% drop in oil prices, pushing West Texas Intermediate crude to $87 a barrel.

July data show a post-lockdown recovery faltering amid a range of economic challenges, including the persistent threat of the coronavirus pandemic. As well as conflicting priorities, Chinese officials are eyeing rising debt and inflation. But the troubled domestic economy seemed to take precedence.

” [People’s Bank of China] Now it seems to have decided there are more pressing issues.The latest data show weak economic momentum in July and slowing credit growth.China, according to economic research firm Capital Economics. economist in charge of

China’s move to stimulate the economy through monetary policy has made Wall Street unhappy. The Dow Jones Industrial Average fell 38 points or 0.4% to open the trading session. The S&P 500 Index dropped 16 points (0.4%) and the tech-heavy Nasdaq dropped 34 points (0.3%).

The People’s Bank of China cut its medium-term lending rate to 2.75% (10 basis points). This is the first reduction since January. The move came as the latest data showed a slowdown in the domestic economy as policies designed to contain the Covid-19 infection and property crisis stalled growth.

“The momentum of the economic recovery is slowing,” government spokesman Fu Linghui said at a news conference, The Associated Press reported. “More efforts are needed to lay the groundwork for the economic recovery.”

For months, some home buyers in China have refused to pay mortgages on the properties they bought while developers have yet to complete construction. It has been linked to project delays, leading to falling home prices and dissatisfied homebuyers.The boycott could collapse China’s property market, undermine the country’s financial system, and hurt the global economy. It raises concerns that

For more than a decade, construction and real estate have fueled China’s phenomenal economic growth and underpinned a rising middle class. This highlights the importance of the mortgage crisis and the damage an unraveled crisis can unleash.

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