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10 Feb 2015
PBoC expected to ease further in H1 – DB
FXStreet (Edinburgh) - In light of today’s inflation figures in China, analysts at Deutsche Bank expect the PBoC to cut rates further during the first half of the year.
Key Quotes
“The +0.8% yoy reading was down from +1.5% previously and below expectations of 1%”.
“DB’s Zhiwei Zhang noted that a large extent of the decline was driven by food prices, which Zhiwei in turn believes is partly driven by weak domestic demand”.
“Our colleagues believe that the number opens the way for further policy easing and they expect an interest rate cut in March and another in Q2, along with a RRR cut in Q2”.
“So it's fair to say that although a prolonged flirtation with deflation would be bad, a brief dalliance might be good if it leads to further global easing. It's a delicate balance though”.
Key Quotes
“The +0.8% yoy reading was down from +1.5% previously and below expectations of 1%”.
“DB’s Zhiwei Zhang noted that a large extent of the decline was driven by food prices, which Zhiwei in turn believes is partly driven by weak domestic demand”.
“Our colleagues believe that the number opens the way for further policy easing and they expect an interest rate cut in March and another in Q2, along with a RRR cut in Q2”.
“So it's fair to say that although a prolonged flirtation with deflation would be bad, a brief dalliance might be good if it leads to further global easing. It's a delicate balance though”.