16 Feb 2015
PBoC policy becomes more pro-growth - ING
FXStreet (Barcelona) - Tim Condon of ING, views PBoC policy has become more pro-growth and hence reviews previous forecast for policy rates in China.
Key Quotes
“We think PBoC policy has become more pro-growth and we are reviewing our forecast of only one 25bp policy interest rate cut this year for upward revision.”
“The January money and credit data released last Friday indicate that the surge in shadowbank credit in December was a one-off and that the November policy interest rate cut is bearing fruit (first figure). Aggregate financing was CNY 2050 billion, up CNY 360 billion from December, which was an unusually small increase ahead of the Lunar New Year holiday.”
“The restraint was in shadow bank credit rather than new bank loans. Trust loans and entrusted loans increased by a combined CNY 85 billion, down from CNY 665 billion in December.”
“We think the balance of economic risks for the PBoC has tilted toward growth, which amid the ongoing clean-up the shadow banking system – new shadow bank credit contracted 20% in 2014 and we expect it to contract again this year – will make 2015 a be a year of robust bank lending.”
“We think the policy shift includes boosting home buying and we forecast another 25bp policy interest rate cut to 5.35% in 2Q.”
“We are reviewing our 5.35% yearend forecast for downward revision (Bloomberg median forecast 5.35%).”
Key Quotes
“We think PBoC policy has become more pro-growth and we are reviewing our forecast of only one 25bp policy interest rate cut this year for upward revision.”
“The January money and credit data released last Friday indicate that the surge in shadowbank credit in December was a one-off and that the November policy interest rate cut is bearing fruit (first figure). Aggregate financing was CNY 2050 billion, up CNY 360 billion from December, which was an unusually small increase ahead of the Lunar New Year holiday.”
“The restraint was in shadow bank credit rather than new bank loans. Trust loans and entrusted loans increased by a combined CNY 85 billion, down from CNY 665 billion in December.”
“We think the balance of economic risks for the PBoC has tilted toward growth, which amid the ongoing clean-up the shadow banking system – new shadow bank credit contracted 20% in 2014 and we expect it to contract again this year – will make 2015 a be a year of robust bank lending.”
“We think the policy shift includes boosting home buying and we forecast another 25bp policy interest rate cut to 5.35% in 2Q.”
“We are reviewing our 5.35% yearend forecast for downward revision (Bloomberg median forecast 5.35%).”