FirstFT: China’s central bank cuts key policy rate

Good morning. We begin today with the Chinese central bank’s decision to cut its main policy rate for the first time in 10 months as new data reinforced concerns over a stalling post-Covid recovery in the world’s second-largest economy.

The People’s Bank of China trimmed its medium-term lending facility rate, a one-year rate that influences bank funding costs, from 2.75 per cent to 2.65 per cent, amid widespread expectations that Beijing would be forced to take further action to support the economy.

The move signalled official dissatisfaction with the state of the Chinese economy, which was widely expected to rebound after authorities abandoned strict coronavirus controls at the start of the year.

But growth has remained feeble, hamstrung by a property sector slowdown, weaker demand for exports and a lack of business and consumer confidence.

Economists anticipate Chinese policymakers will unleash more support over the coming months.

“Ultimately they’ll need to use every lever in the policy bag to get this economy to turn around,” said Rob Carnell, Asia-Pacific head of research for ING.

What do you think is behind China’s struggles to reinvigorate its economy? Email your ideas to benjamin.wilhelm@ft.com.

Here’s what else I’m keeping tabs on today and over the weekend:

• Japan: The Bank of Japan makes its interest-rate announcement following the Monetary Policy Committee meeting today. In politics, prime minister Fumio Kishida is expected to face a no-confidence vote. (Reuters)

• US-China relations: Secretary of state Antony Blinken will travel to Beijing this weekend, part of an American effort to stabilise ties with China.

• Holiday: Father’s Day is celebrated in various countries on Sunday.

Five more top stories

1. The European Central Bank has raised interest rates by a quarter-point to 3.5 per cent, their highest level in 22 years, and warned that inflation is far from vanquished. ECB president Christine Lagarde said that rate-setters were “very likely” to increase rates again in July.

2. A bitter clash among Nissan’s top leadership has forced out an executive previously tipped as its next president. The impending departure of chief operating officer Ashwani Gupta is seen as smoothing the Japanese carmaker’s partnership with France’s Renault. Read more about the chronic infighting at Nissan.

3. Boris Johnson has been condemned for lying to parliament over the Covid-19 partygate scandal. The damning report said that the former prime minister would have faced a 90-day suspension if he had not already quit as an MP. The findings cast doubt on whether Johnson can stage a political comeback.

4. German industrial conglomerate Siemens has announced significant investments in factories in China and Singapore, as part of its diversification strategy to serve more markets in Asia and tackle supply chain issues. But Siemens’ China strategy has been questioned by investors, who are becoming wary of any dependence on the country amid geopolitical tensions.

5. Australia’s government has blocked Russia from building a new embassy near its parliament over national security concerns. Read more on Canberra’s darkening view of Moscow.

How well did you keep up with the news this week? Take our quiz.

The Big Read

At first glance, the US stock market seems to have defied pessimists. The S&P 500 has risen more than 14 per cent this year, and with two weeks still to go, this is already one of the best half-years for the index in two decades. But this is a rally standing on top of some very slender stilts. Strip out just a tiny clutch of tech companies, and the index is going nowhere.

We’re also reading . . . 

• FT investigation: The UK’s struggling fishing industry has come to rely on low-paid workers. A tightly knit band of Filipino fishermen suffered the consequences.

• Russia’s nuclear fever: Putin’s threats are a symptom of a wider anxiety that the US and Nato are bent on Russian dismemberment, writes Rose Gottemoeller.

• VC investment: The good old days when VCs could thrive by adopting a “spray and pray” investment strategy are over — even when it comes to AI, writes John Thornhill.

Graphic of the day

Cruise ships pumped four times more harmful sulphuric gases into the atmosphere in Europe than passenger vehicles last year, according to climate lobby group Transport & Environment. Barcelona ranks as the worst-affected port city in Europe for sulphur oxide emissions, which have been proven to cause acid rain and can aggravate respiratory conditions.

Take a break from the news

Downhill skateboarding is a breathtakingly dangerous sport. But skaters like Jenny Schauerte are part of a growing band of free spirits who travel the globe in search of the perfect descent. Simon Usborne’s hair-raising piece takes you inside their wild world.

Additional contributions by Tee Zhuo and Gordon Smith