Goldman Flag Emphasis On Near-Term Inflation Pressure In PBoC Q2 MPR

Goldman Sachs note that “In sum, the PBOC’s Q2 monetary policy report focuses on policy implementation and puts more emphasis on near-term inflationary pressures. The deletion of "broadly stable macro leverage ratio" suggests policymakers might continue to maintain fast credit growth despite slower economic growth, and the phrase of "working hard to achieve the best possible economic growth" is also consistent with de-emphasis of the "around 5.5%" full-year nationwide economic growth target in the July Politburo meeting. We continue to expect unchanged overall reserve requirement ratio and policy interest rates but more reliance of targeted tools such as relending and policy bank lending to keep broad credit growth at a fast pace to facilitate overall economic growth.”