MNI China Daily Summary: Wednesday, April 17

MNI BRIEF: China To Quicken Project Construction - NDRC

MNI BRIEF:ECB Unifies Interest On Non-Monetary Policy Deposits

MNI: PBOC Conducts CNY2 Bln Via OMO Weds; Liquidity Unchanged

MNI: PBOC Sets Yuan Parity Lower At 7.1025 Weds; -5.39% Y/Y

CHINA PBOC INJECTS CNY2 BILLION VIA 7-DAY REVERSE REPOS WEDS

US EIA: CRUDE OIL STOCKS EX SPR +2.74M TO 460.0M APR 12 WK

MNI: FOREIGN HOLDINGS OF CANADA SECURITIES -8.8B CAD IN FEB

ECB Underlying Inflation Metrics Support June Cut Consensus

RPT-MNI: Canada Sticks To Fiscal Anchors, Spends Chunk Of Windfall

MNI BRIEF: Poilievre Calls QE 'Scam' And Would Limit BOC Remit

MNI: Growth Drag From Net Zero Carbon Goal Can Be Offset-OECD

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JPM on CNB: Still Room For Further Hikes

CZECHIA
  • Although Aleš Michl’s preference for stable rates from August is well known (he likely voted against today’s move as well, we believe), he will represent just one vote in the board, and ultimately the data will dominate.
  • In the last three months, core CPI has run at an average annualized pace of over 17%, and JPM expects it to continue progressing at a fast pace for at least another couple of months.
  • In that scenario, the CNB’s August projection likely will prescribe an even higher rate path (instead of 8-8.5%, the peak can easily move to 9.5-10%).
  • The market has already reacted negatively to Mr. Michl’s declaration of intentions; if the board were to neglect a hypothetical hawkish input by the research department at this stage, credibility could be questioned, in JPM view, and analysts think FX depreciation pressure would increase further. Given that the new Governor is also known for considering FX sales undesirable, he will have to opt for the lesser of two evils from his point of view.
  • JPM believes if credibility is at stake, ultimately the issue must be addressed with rates, which is why JPM still sees another final rate hike of 50bps in August (to 7.5%).
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