16 Feb 2016
RBA Minutes: Little prospect for pick-up in non-mining business investment - Rabobank
Michael Every, Head of Financial Markets at Rabobank, suggests that the RBA minutes for February played us yet more of Somnolence in G (Stevens) Minor.
Key Quotes
“The potential interaction between slowing growth, low inflation and high – and increasing – levels of debt was an important source of uncertainty around the outlook for the Chinese economy…” as was “…uncertainty about the Chinese authorities' intentions for the future value of the renminbi.” And recall that Chinese lending data this morning underlined that debts are indeed still being piled on at a furious rate to no real effect on growth, with aggregate financing up CNY 3.42 trillion in January alone, equal to USD 525bn in one month, and an annualized rate of USD 6.3trillion.
What could go wrong there? Furthermore, the RBA noted that “…leading indicators of investment intentions had continued to suggest that there was little prospect for a pick-up in non-mining business investment in the near term,” which I’ve been saying would be the ‘new normal’ reality for a long time now.”
Key Quotes
“The potential interaction between slowing growth, low inflation and high – and increasing – levels of debt was an important source of uncertainty around the outlook for the Chinese economy…” as was “…uncertainty about the Chinese authorities' intentions for the future value of the renminbi.” And recall that Chinese lending data this morning underlined that debts are indeed still being piled on at a furious rate to no real effect on growth, with aggregate financing up CNY 3.42 trillion in January alone, equal to USD 525bn in one month, and an annualized rate of USD 6.3trillion.
What could go wrong there? Furthermore, the RBA noted that “…leading indicators of investment intentions had continued to suggest that there was little prospect for a pick-up in non-mining business investment in the near term,” which I’ve been saying would be the ‘new normal’ reality for a long time now.”