From Bloomie:
With China’s economy stable for now and home prices in major cities soaring, analysts are dialing back forecasts for additional monetary stimulus, with some betting on a switch to tightening mode.
And as its policy framework evolves, The People’s Bank of China will make its next broad move by guiding interest rates through a corridor, rather than the traditional approach of changes to benchmark lending and deposit rates, according to a Bloomberg survey of 18 economists from Sept. 19 to 26.
Here’s a snapshot of the main findings:
* Fifteen expect a monetary policy shift to tightening in three years, with four forecasting a switch could come next year and one tipping this year
* Seven expect the PBOC will make its next broad policy move by guiding interests in a corridor using changes to short, medium and longer-term lending facilities. Four expect the next broad move coming via changes to bank’s required reserve ratios, while three expect the PBOC will use changes to repo rates to steer policy
* Just one economist forecasts the next policy move will be a change to benchmark one-year lending and deposit rates, while another sees a mix of benchmark rate and RRR moves.
* A majority expect the yuan to bottom out by the end of 2017
“We don’t expect the PBOC to ease further given the concerns about the overheating property market,” said CCB International Holdings Ltd economist Cui Li, who forecasts a tightening in the first half of next year.
Possible if prudential tightening doesn’t slow top tier city house prices over time but I think it will. Aside form anything else, the PBOC is not going to want to tighten into the next leadership round in mid-2017. As well, the CCP has made it plain that housing inventory destocking is a priority which tightening defer. It’s a long shot.
