30 Mar 2015
Further PBoC easing on the cards? – Danske Bank
FXStreet (Edinburgh) - In the view of analysts at Danske Bank, the PBoC could incur in further monetary stimulus in the medium term.
Key Quotes
“The Chinese economy is also on a softer path than initially expected”.
“HSBC Flash manufacturing PMI declined more than expected to 49.2 in March from 50.7 in February, the lowest level since April 2014. It suggests that the small rise in February was just a blip and probably distorted by the Chinese New Year”.
“It adds to the picture of a weaker economy also seen in hard data for industrial production and investments lately and it implies more monetary easing in our view”.
“We expect the leading interest rate to be cut by another 25bp in Q2 and the reserve requirement for commercial banks to be cut by 150bp in the coming months”.
“It may increase speculation that China would weaken the CNY but the currency has not been used as an active policy tool and we do not expect it to be so this time either”.
“China will continue to halt the appreciation trend but is unlikely to go for a depreciation in our view”.
Key Quotes
“The Chinese economy is also on a softer path than initially expected”.
“HSBC Flash manufacturing PMI declined more than expected to 49.2 in March from 50.7 in February, the lowest level since April 2014. It suggests that the small rise in February was just a blip and probably distorted by the Chinese New Year”.
“It adds to the picture of a weaker economy also seen in hard data for industrial production and investments lately and it implies more monetary easing in our view”.
“We expect the leading interest rate to be cut by another 25bp in Q2 and the reserve requirement for commercial banks to be cut by 150bp in the coming months”.
“It may increase speculation that China would weaken the CNY but the currency has not been used as an active policy tool and we do not expect it to be so this time either”.
“China will continue to halt the appreciation trend but is unlikely to go for a depreciation in our view”.