MNI China Press Digest Oct 16: Monetary Policy, MLF, Demand

MNI (Beijing) - The following lists highlights from Chinese press reports on Friday:

Loose monetary policy in China' may have reached its highest point in September and policymakers are likely to further "control the rhythm" to prevent excessive stimulation as exports remain vibrant, consumption recovers and state-led investments take effect, the 21st Century Business Herald said in a commentary. The rise in macro-leverage ratios in the first half was phasic and is likely to decline as the economy expands, the newspaper said. The bond and equity markets are taking a greater share of the real economy's need for capital, it said.

The PBOC is likely to maintain the current MLF operating rate to the end of the year to allow controlled liquidity and also account for potential growth in Q4 and Q1 2021, the China Securities Journal reported citing Yan Se, an economist from Founder Securities. China is likely to expand its fiscal expenditure in the next two months to improve liquidity, and the probability of rate or RRR reductions are small given the current level of inflation, the Journal reporting citing Wen Bin, a researcher from China Minsheng Bank. The MLF renewals will likely carry a stable long-term interest rate to reduce financing costs and support the real economy, said Wen.

China's domestic demand is steadily recovering with the core CPI rising for two consecutive months, the Shanghai Securities News reported citing analysts. Core CPI, which excludes food and energy prices, rose for the second month by 0.2% m/m in September, the fastest since the outbreak of the epidemic, confirming the continued improvement of terminal demand, the newspaper said citing Zhu Jianfang, chief economist of CITIC Securities. China's overall CPI slowed to 1.7% y/y from 2.4% in August, though the indicator is heavily weighted with food items including pork.