No much room for China to loosen monetary policy

FXStreet (Bali) - The China Securities Journal front page editorial reports that there is limited room for China to loosen monetary policy, comments that come after a disappointing HSBC flash PMI last Monday, an 8-month low, had fueled talk over the possibility of China creating further stimulus.

According to the newspaper, via MNI, "it said that monetary policy could only be eased when there is sharp yuan depreciation and strong capital outflows, which has yet to be seen." The paper added that "the government has the ability to push for a higher economic growth rate but doing so would only bring bigger crisis in the future", also noting that "current priorities are jobs and preventing systemic risk."

Lastly, MNI added, making reference to the newspaper information: "As such it would continue with the neutral monetary policy and proactive fiscal policy in selected areas, adding also that recent railway investments would help growth. China needs a gradual process to squeeze current price bubbles to improve the quality of growth and to lower the possibility of a big crisis ahead. No need to be overly pessimistic about the short-term and growth for the whole year won’t see a cliff-fall slow-down."