I posted on comments from a PBOC official here:
- Tax cuts would be a more effective way of stimulating the economy than interest rate cuts
- Firms are still unwilling to invest
As a bit of background, Bloomberg have this:
- A reluctance to invest is frustrating policy makers after they unleashed a wave of cheap credit in an effort to stoke growth
- Rather than build new plants or hire additional staff, corporates are opting to park money at the bank - or send it overseas through buying foreign assets
- Known as the so called "liquidity trap," it's a problem not unlike the experience in Japan where weak business confidence and a reluctance to invest is also holding back the economy
More at Bloomberg
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I'd post the 'Turning Japanese' vid, but its been done to death. Good song though. Even though its not really liquidity traps etc :-D
