Goldman Tweaks PBoC Easing Expectations

In the wake of the PBoC’s quarterly MPC meeting Goldman Sachs note that “consistent with the readout from the CEWC, the PBoC focused on enhancing monetary policy efficiency - stating that monetary policy should be "precise and effective", echoing the statement from the CEWC but different from "precise and forceful" in its Q3 MPC meeting statement.”

• “In particular, the authority vowed to "revitalize inefficient financial resources and enhance efficiency of funding" in the Q4 minutes.”
• “The PBoC also reiterated its supportive stance to property developers and pledged to maintain a broadly stable exchange rate.”
• “In light of the recent news on large banks' cutting deposit rates and a more dovish Fed, we push our Q4 policy rate cut forecast into Q1 next year.”
• “For 2024, we now expect the PBOC to cut policy rates (7-day OMO and 1-year MLF) in Q124 and Q324 (by 10bp each), and to cut RRR in Q224 and Q424 (by 25bp each) to facilitate overall economic growth.” Their previous expectations looked for one policy rate cut and three RRR cuts in ’24.