VIEW: Goldman Sachs: Policy Shifted To An Easing Mode

Goldman Sachs note that “the latest Politburo meeting and RRR cut confirmed that policymakers have focused on stabilizing growth by shifting to an easing mode. This is consistent with our expectations as our 4.8% real GDP forecast for next year has already embedded moderately easier domestic macro policy in 2022 vs. 2021. Given the latest policy signals, we expect another RRR cut in Q1 next year. Although the 1-year LPR rate may drop 5bp on the back of the July and December RRR cuts, we still do not expect policy rates (OMO and MLF) to change. The recent dovish signals have reduced left-tail risk to next year's GDP growth, in our view, but property market developments remain the key to watch in the coming months.”