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<Research>Nomura: PBOC's Policy Measures In Line; Forecast of 10-bp Policy Rate Cut and 50-bp RRR Cut for Yr Kept
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The People's Bank of China (PBOC) announced yesterday (15th) a series of measures that broadly met expectations, Nomura said in its report. Since last September, the PBOC should have already avoided high-profile monetary easing measures such as interest rate cuts and reserve requirement ratio (RRR) cuts to prevent fueling an overheated stock market. This action is deemed the correct approach to address the rapid deterioration of the economic momentum in Mainland China and also indicates the Chinese authorities' increasing concern about growth trends. The report quoted PBOC Deputy Governor Zou Lan as saying that there is still room to lower the RRR and interest rates. He also mentioned that the RMB exchange rate is relatively stable at present, and the US is in a rate-cutting cycle, so the exchange rate does not pose a strong constraint. Nomura viewed that the PBOC's current action and the Deputy Governor's remarks align with its forecast of a one-time reduction in policy rates and RRR by 10 and 50 bps, respectively, this year, with the base case expected to be realized in the second quarter. AASTOCKS Financial News Website: www.aastocks.com |
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