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Goldman Sachs Maintains China Easing Calls Post Credit Data

CHINA DATA

The US bank maintains RRR and policy rate cut (10bps) for the second half in light of the China credit data on Friday


  • Goldman Sachs: " June money and credit data indicated credit demand remained weak. The recent policy communication suggests that the PBOC continues to focus on enhancing monetary policy transmission and downplay the importance of aggregate credit growth. Looking ahead, the growth of new CNY loans and M2 may gradually slow down further. We see some downside risks to our 2024 full-year TSF growth forecast (currently 9.0%). As highlighted by the Securities Times (证券时报, a state-owned newspaper supervised by the People's Daily), FX stability considerations amid elevated Fed/global interest rates and falling net interest margins among commercial banks continue to be solid constraints on sizeable policy rate cuts. We maintain our forecast for a 25bp RRR cut in Q3 to facilitate government bond issuance, and a 10bp policy rate cut in Q4 after the first Fed rate cut in September expected by our US Economics team."

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