Weekend Economists Wild, Wild, World Roundup February 17-19, 2012

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37. China Cuts Bank Reserve Reqs; Exports ’Grim’

http://www.bloomberg.com/news/2012-02-18/china-cuts-banks-reserve-ratios-a-second-time-as-europe-threatens-growth.html

China cut the amount of cash that banks must set aside as reserves for the second time in three months to spur lending as Europe’s debt crisis and a cooling property market threaten economic growth.

Reserve ratios will fall 50 basis points, effective Feb. 24, the People’s Bank of China said on its website yesterday evening. The level for the nation’s largest lenders will decline to 20.5 percent, based on previous statements.

China follows Japan in expanding monetary easing even as global equity markets are buoyed by signs of strength in the U.S. economy and optimism that Europe’s fiscal crisis will be contained. Governor Zhou Xiaochuan’s officials moved on the same day that a report showed home prices slid in most of the nation’s major cities in January.

“Chinese policy makers are very much concerned about a possible deeper slowdown in domestic growth,” said Yao Wei, a Hong Kong-based economist with Societe Generale SA.