PBOC ramps up easing rhetoric heading into 2022

Goldman Sachs with the note:

Bottom line:

The PBOC held its Q4 monetary policy committee meeting on December 24th, with the meeting statement released on the evening of 25th December. The PBOC’s Q4 MPC meeting echoed Beijing’s stance at the recent Central Economic Working Conference (CEWC) – it emphasized policymakers would step up support to the real economy. Compared with the Q3 PBOC monetary policy committee meeting statement, the Q4 statement appeared more pro-growth: policymakers acknowledged growth headwinds, pledged for more pro-growth policy support, and slightly softened its tone on the property sector; it also stated an intention to increase the use of structural monetary policies, especially favoring SMEs, high-tech sectors and green industries. Meanwhile, the PBOC continued to call for a boost in
domestic demand, a lowering of the average financing costs for firms, increasing policy coordination among ministries, and keeping the economy growing in a reasonable range.

Main points:

1. Compared to its Q3 statement, the PBOC at its Q4 MPC meeting turned more cautious on its growth outlook, indicated an intention to use broad and targeted policy tools to support the real economy in a more pro-active manner, and on the margin eased its tone on the property sector. However, these new changes were in line with key messages from the recent CEWC, signaling more policy easing measures underway.

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