Nomura: The PBoC Will Likely Maintain Its “Wait-And-See” Policy Stance

In the wake of the release of September's monthly credit data Nomura noted that "when gauging Beijing's policy intentions, we have focused on credit growth rather than market interest rates including government bond yields. In our view, elevated credit growth in September suggests market concerns about a People's Bank of China (PBoC) tightening are overdone, the rise in bond yields in the past few months reflects high funding demand instead of a PBoC tightening, and infrastructure spending will likely push up headline GDP growth further. We maintain our real GDP growth forecast of 5.2% y-o-y for Q3 and 5.7% for Q4. Because of the ongoing growth recovery but still strong headwinds, we expect Beijing to maintain its "wait-and-see" policy approach through the remainder of this year by neither easing further nor tightening. We do not expect any rate cuts and RRR cuts, and do not expect any tightening measures either. We expect outstanding AF growth to stay around its current level in Q4."