Hello Shanghai Accord! With the Fed in neutral, Barclays says China is next to cut, via Bloomie:
“Existing measures are not sufficient to lower the financing costs of the real economy, in a down-cycle with rising credit risk and falling producer-price inflation,” the analysts led by Jian Chang wrote in a note. “Hence, lowering the risk-free rate is unavoidable, in our view,” she wrote.
It’s a notable call: Chang was the only economist in Bloomberg surveys to correctly predict rate cuts that policy makers enacted in late 2014.The central bank isn’t in a hurry to cut the one-year lending and deposit rates, according to Citibank economists. However, in a note from Wednesday, they said they expect a cut in the Standing Lending Facility rate, which is the Chinese equivalent of the Fed’s Discount Window, from as early as February.
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