12 May 2015
PBoC could cut rates by another 25bp and the RRR is expected to be cut by at least 150bp – Danske
FXStreet (Mumbai) - The Peoples' Bank of China (PBoC) will continue trimming its benchmark interest rates in the coming months to support recovery in the second half of the year, Danske Bank wrote on Monday, predicting a 15 basis point cut in lending rate and a more deep, 25 basis point cut in the RRR rate.
Flemming Jegbjaerg Nielsen, senior analyst at Danske Bank, noted, "We expect PBoC to continue to ease in the coming months, albeit the easing measures are expected to be increasingly centered on cuts in the reserve requirement,"
"The leading interest rates could be cut by another 25bp and the reserve requirement is expected to be cut by at least 150bp."
He added, "It is still our view that China is not targeting a weaker CNY to support growth. In the past two months the CNY has appreciated slightly against the USD and has decoupled from the weak data and the more aggressive monetary easing."
"We expect the current easing measures to support a moderate recovery in H2 15 but it is still too early to call the bottom for the manufacturing PMIs."
Flemming Jegbjaerg Nielsen, senior analyst at Danske Bank, noted, "We expect PBoC to continue to ease in the coming months, albeit the easing measures are expected to be increasingly centered on cuts in the reserve requirement,"
"The leading interest rates could be cut by another 25bp and the reserve requirement is expected to be cut by at least 150bp."
He added, "It is still our view that China is not targeting a weaker CNY to support growth. In the past two months the CNY has appreciated slightly against the USD and has decoupled from the weak data and the more aggressive monetary easing."
"We expect the current easing measures to support a moderate recovery in H2 15 but it is still too early to call the bottom for the manufacturing PMIs."