China rate cut: Game changer or warning sign?

China's decision to cut interest rates for the first time since December 2008 has met with a mixed response as investors try to fathom the implications of the move.

Having spent the past 12 months fine tuning banks' reserve requirements and other policy tools, the People's Bank of China yesterday cut both benchmark lending and deposit rates by 25bps to 6.31% and 3.25%. The central bank also raised the ceiling on the deposit rate from 1x to 1.1x and lowered the floor of the lending rate to 0.8x from 0.9x. Bill Maldonado, CIO, Asia Pacific at HSBC Global Asset Management, summed up the opposing reactions to a decision seen as fuel for both the bull and the bear cases on China. "The timing of the rate cut - two days prior to the May macro data re...