24 Apr 2014
PBoC to cut RRR for the whole banking sector in May or June - Nomura
FXStreet (Bali) - Zhiwei Zhang, Economist at Nomura, still expects growth momentum in China to continue its downtrend.
Key Quotes
"We do not believe that this uptick in the HSBC PMI signals any sort of turning point for the economy and continue to believe that growth momentum is on a downtrend, with GDP growth likely to slow to 7.1% in Q2 as the property sector shows signs of further weakening."
"Following the State Council's decision on 16 April, the People‟s Bank of China (PBoC) announced a 200bp cut in the reserve requirement ratio (RRR) for rural commercial banks and a 50bp cut for rural cooperative banks (effective 25 April). We maintain our view that the PBoC will cut the RRR for the whole banking sector in May or June."
"We also expect credit supply and fiscal policy to be more expansionary. If the government does not loosen policy further, GDP growth is likely to drop below 7% y-o-y in Q2 or Q3.The likelihood of an interest rate cut is also rising, although it is not yet part of our baseline view (see China: Q&A on policy easing, 25 March 2014."
Key Quotes
"We do not believe that this uptick in the HSBC PMI signals any sort of turning point for the economy and continue to believe that growth momentum is on a downtrend, with GDP growth likely to slow to 7.1% in Q2 as the property sector shows signs of further weakening."
"Following the State Council's decision on 16 April, the People‟s Bank of China (PBoC) announced a 200bp cut in the reserve requirement ratio (RRR) for rural commercial banks and a 50bp cut for rural cooperative banks (effective 25 April). We maintain our view that the PBoC will cut the RRR for the whole banking sector in May or June."
"We also expect credit supply and fiscal policy to be more expansionary. If the government does not loosen policy further, GDP growth is likely to drop below 7% y-o-y in Q2 or Q3.The likelihood of an interest rate cut is also rising, although it is not yet part of our baseline view (see China: Q&A on policy easing, 25 March 2014."