Headlines from China Securities Journal via Bloomie:
- CHINA MAY INCREASE REFINANCING SCALE, SECURITIES JOURNAL SAYS
- CHINA MAY CUT RESERVE RATIO IN SOME REGIONS: SEC. JOURNAL
- CHINA MAY RELAX LOAN-DEPOSIT RATIO LIMIT: SEC. JOURNAL
Xinhua says the cuts (if they come) are unlikely to be broad based:
A fully-fledged cut of the reserve requirement ratio (RRR) for banks is unlikely, as the central bank prefers targeted monetary tools, economists have said, as speculation mounts about such a dramatic move to heat China’s lukewarm economy.
Faced with an economic slowdown, the People’s Bank of China (PBOC) has been treading cautiously in its monetary policy shift. Instead of an RRR or interest rate cut, the central bank has resorted to measures such as “targeted” RRR cuts for rural banks and re-lending.
While some analysts see a rising possibility of a RRR or rate cut, Peng Wensheng, chief economist of the China International Capital Corporation (CICC), said such a possibility is small.
There is a tendency for the central bank to resort to capital injection instead of RRR or rate cuts in easing the monetary policy, he said.
“Another explanation is the economic situation is not that bad, and the central bank prefers low-profile and targeted monetary easing. A RRR cut is not only high-profile, but also has too strong an influence,” Peng added.
Echoing Peng, Lu Ting, chief China economist with Bank of America Merrill Lynch, said, “The new government is determined to break away from the past mode of policy easing,” featuring cuts to RRR or interest rates.
In a research note, Lu forecast that the government will roll out “targeted stimulus measures” which emphasize fiscal spending by the central government, reduce funding costs, especially for small borrowers, attract private capital, and ease restrictions in the property market.
Monetary policy is already being finetuned and the words of Premier Li “do not suggest significantly more aggressive moves such as RRR cuts or rate cuts,” Lu added.
Yep.
