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CHINA PRESS: China Has Room For Interest Rate Cuts

CHINA PRESS
EM BulletAPACChinaEmerging Market NewsBulletMarketsFixed Income BulletsForeign Exchange Bullets

Monetary authorities have room for 40 basis points of interest rate cuts in future, said Sheng Songcheng, professor of economics and finance at the China Europe International Business School, after analysing China’s historical monetary policy to CPI relationship. Sheng said officials needed monetary policy to remain supportive to restore low corporate investment confidence. Given recent PBOC forward guidance, Sheng anticipated authorities will cut the reserve requirement ratio by 0.25-0.5 percentage points this year. A RRR cut will be needed to support the issuance of treasury bonds and local bonds.

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Monetary authorities have room for 40 basis points of interest rate cuts in future, said Sheng Songcheng, professor of economics and finance at the China Europe International Business School, after analysing China’s historical monetary policy to CPI relationship. Sheng said officials needed monetary policy to remain supportive to restore low corporate investment confidence. Given recent PBOC forward guidance, Sheng anticipated authorities will cut the reserve requirement ratio by 0.25-0.5 percentage points this year. A RRR cut will be needed to support the issuance of treasury bonds and local bonds.