Asian markets fall as investors weigh concerns about Fed rate hikes;  China cuts benchmark interest rates

Asian markets fall as investors weigh concerns about Fed rate hikes; China cuts benchmark interest rates

IMF heads to Colombo for more economic solutions

The International Monetary Fund will visit Colombo this week to continue discussions with the Sri Lankan authorities on economic and financial reforms and policies.

“The goal is to make short-term progress towards a staff-level agreement on a future IMF Extended Fund Facility (EFF) arrangement,” the IMF said in a statement over the weekend.

“Since Sri Lanka’s public debt is assessed as unsustainable, approval by the IMF’s board of directors of the EFF program would require sufficient assurances from Sri Lanka’s creditors that debt sustainability will be restored.”

The IMF had already completed a first round of talks at the end of June as it worked with Colombo on a macroeconomic and structural policy package “to correct macroeconomic imbalances, restore public debt sustainability and realize Sri Lanka’s growth potential.”

Other challenges to be solved include managing rising inflation and addressing severe balance of payments pressures.

The EEF is the IMF’s credit facility and helps countries solve balance of payments or cash flow problems.

— Su-Lin Tan

Chinese central bank cuts lending rates

The People’s Bank of China cut its benchmark one-year rate by 5 basis points and the five-year rate by 15 basis points, according to an online statement.

That brings the one-year loan prime rate to 3.65% and the five-year LPR to 4.3%.

Analysts polled by Reuters expected a 10 basis point cut in the one-year LPR, and half of the survey respondents expected the five-year rate cut by 15 basis points.

— Abigail Ng

CNBC Pro: How to Reduce Risk in Your Portfolio Now, According to the Pros

Stocks have been volatile this year as a mix of recession fears, inflationary pressures and other macro risks rumble in the markets.

Here are three ways investors can adjust their portfolios to lower their risks or limit losses, according to Goldman Sachs, Wells Fargo and others.

Pro subscribers can read more here.

— Weizhen Tan

CNBC Pro: JPMorgan Predicts When the Rally in Growth Stocks Will End

Investors have been flocking to growth stocks lately, but as recession fears mount, market watchers are deciding whether to switch to safer bets instead.

However, JPMorgan thinks the rally needs to go even further, citing several indicators to watch out for when considering a rotation out of growth stocks.

Pro subscribers can read the story here.

— Zavier Ongo

What to expect from Powell’s Jackson Hole speech

Fed Chair Jerome Powell is expected to speak this week at the central bank’s annual symposium in Jackson Hole, Wyoming, and shed some light on the pace of future rate hikes.

Powell may make aggressive comments from Fed officials who recently underlined their commitment to fighting inflation, even as investors enjoyed a summer rally, in part because of expectations of a less aggressive Fed.

Still, James Bullard, president of the St. Louis Fed, said in an interview with the Wall Street Journal last week that he is considering another 0.75 percentage point rate hike at the September meeting.

Check out CNBC Pro to learn more about what to expect from the Fed chairman.

— Sarah Min

China plans to cut benchmark interest rates, Reuters poll predicts

China is set to release its loan prime rates (LPR) on Monday, with analysts widely expecting cuts, according to a Reuters poll.

The majority of analysts forecast a cut in the one-year benchmark interest rate by 10 basis points, while expecting the five-year LPR to be cut by more than 10 basis points.

About half of the 30 poll participants predicted a 15 basis point cut, Reuters reported.

The one-year LPR is currently at 3.7% after a cut in January, and the five-year rate at 4.45%. China cut its five-year LPR by 15 basis points in May, in a move that would support housing demand.

— Abigail Ng

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