11 Feb 2015
PBoC’s Q4 monetary policy report confirms a more accommodative stance – Nomura
FXStreet (Barcelona) - The Research Team at Nomura reviews the PBoC’s Q4 monetary policy report, and suggests that the central bank is ready for a more accommodative stance, further expecting China to see a total of 150bp RRR cut and 25bp interest rate cut by Q2 this year.
Key Quotes
“The PBoC reiterated its "prudent" policy stance but, in our view, indicated a slightly looser bias. Compared with Q3’s report, the PBoC stressed that it would keep monetary policy more balanced between tightening and loosening, in line with the message from the Central Economic Working Conference”
“The PBoC still believed the economy was operating at a reasonable pace in Q4, but placed more emphasis on the downtrend in inflation. The PBoC mentioned in a box that it will remain cautious on the impact of oil prices on market expectations and economic behavior.”
“The PBoC emphasized two new growth engines – innovation and the supply of public goods. We think this suggests that it will continue to support economic growth through tools that inject liquidity into the economy via policy banks [..]”
“Overall, we think the report indicated a slightly looser bias, which is consistent with our view.”
“We believe last week’s RRR cut was just the start of a series of easing measures. We maintain our call for three more RRR cuts (50bp each quarter) and one 25bp benchmark interest rate cut in Q2 this year.”
Key Quotes
“The PBoC reiterated its "prudent" policy stance but, in our view, indicated a slightly looser bias. Compared with Q3’s report, the PBoC stressed that it would keep monetary policy more balanced between tightening and loosening, in line with the message from the Central Economic Working Conference”
“The PBoC still believed the economy was operating at a reasonable pace in Q4, but placed more emphasis on the downtrend in inflation. The PBoC mentioned in a box that it will remain cautious on the impact of oil prices on market expectations and economic behavior.”
“The PBoC emphasized two new growth engines – innovation and the supply of public goods. We think this suggests that it will continue to support economic growth through tools that inject liquidity into the economy via policy banks [..]”
“Overall, we think the report indicated a slightly looser bias, which is consistent with our view.”
“We believe last week’s RRR cut was just the start of a series of easing measures. We maintain our call for three more RRR cuts (50bp each quarter) and one 25bp benchmark interest rate cut in Q2 this year.”