The chain reaction of stock market plunges around the world may have subsided for now as the Tokyo Stock Exchange halted its six-day losing streak on Wednesday following interest rate cuts by China's central bank the previous evening. However, the underlying concern over the slowdown of China's growth — which triggered the global market turbulence — appears to remain.
The Chinese leadership should continue to explore policy steps to ensure a soft landing of its economy while enhancing transparency in its economic management. Other major economies should closely coordinate their policies to prevent China's slowing growth from triggering a global shock. The United States in particular should carefully weigh the impact that the anticipated tightening of its monetary policy could have on the emerging economies.
The Tuesday evening decision by People's Bank of China to cut interest rates for the fifth time since November and lower banks' minimum reserve requirements led to gains in European markets, although the Dow Jones industrial average on the New York Stock Exchange continued its slide for the sixth day after a volatile trading. The Nikkei average on the TSE rose 570.13 points to close at 18,376.83 on Wednesday, the first day-to-day rise since Aug. 17.