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5 Feb 2015
China to see more RRR cuts - ING
FXStreet (Barcelona) - According to Prakash Sakpal of ING, China might see a 50bp RRR cut per quarter and at least one more 25bp policy rate cut by yearend.
Key Quotes
“RRR cuts and policy interest rate cuts are bazookas to be used when downward pressure on growth becomes intense. The November policy rate cuts were preceded by complaints by Premier Li about the lack of credit flow to businesses and we will be looking for similar hints to gauge the likelihood of a bazooka stimulus.”
“We now expect a 50bp RRR cut per quarter and at least one more 25bp policy rate cut by yearend. Both the RRR and policy rate cut forecasts are subject to greater risk of being revised higher rather than lower, in our view.”
“We expect the positive liquidity effect from latest RRR cut to pressure government bond yields lower and we are reviewing our yearend 3.70% 10-year yield forecast for downward revision (latest 3.46%, Bloomberg consensus 3.54%).”
Key Quotes
“RRR cuts and policy interest rate cuts are bazookas to be used when downward pressure on growth becomes intense. The November policy rate cuts were preceded by complaints by Premier Li about the lack of credit flow to businesses and we will be looking for similar hints to gauge the likelihood of a bazooka stimulus.”
“We now expect a 50bp RRR cut per quarter and at least one more 25bp policy rate cut by yearend. Both the RRR and policy rate cut forecasts are subject to greater risk of being revised higher rather than lower, in our view.”
“We expect the positive liquidity effect from latest RRR cut to pressure government bond yields lower and we are reviewing our yearend 3.70% 10-year yield forecast for downward revision (latest 3.46%, Bloomberg consensus 3.54%).”