Updated J.P. Morgan Views Post Last Week's Inflation Data

J.P. Morgan sees another RRR cut in July (possibly June), but interest rates on hold.

• "On monetary policy, we think the probability of policy rate cut is still relatively low, though market interest rates can come lower. We expect the government to mobilize existing policy space to deal with the current headwinds. We look for a 25bp RRR cut in our baseline assumption in July (which may be brought forward to June). We maintain our forecast of relatively stable TSF growth this year (9.8% in 2023). The probability of a new stimulus package (including policy rate cuts), remains low in the near term, in our view.
  Policy re-assessment may take place in July around the politburo meeting. If economic activity continues to slide, deflation risk increases, and 2Q GDP misses expectations to put full-year growth target (5%) at risk, it may trigger re-assessment for 2H macro policy and additional policy stimulus, including policy rate cut or further policy support on investment, industry upgrade and green sectors."