Low Inflation Gives PBOC More Space for Easing: News

China's low reported inflation has given the People’s Bank of China space to further ease its monetary policy and stimulate economic growth, the Shanghai Securities News reported citing analysts. CPI in January eased to 0.9% y/y, down 0.6 pp from December, while PPI's gain narrowed by 1.2 pp to 9.1%, official stats on Wednesday showed. The PBOC may consider an RRR cut to ensure ample liquidity, as the total amount of infrastructure-back special bonds may increase significantly from last year, requiring better credit and social financing support, the newspaper said citing Lian Ping, the chief economist of Zhixin Investment Research Institute. The PBOC may be constrained once the U.S. starts its rate hikes, but is expected to keep market interest rate level stable by using short-term money market tools, the newspaper cited Lian as saying.