The People’s Bank of China issued its fourth quarter (2015) Monetary Report on Saturday

There was the usual sort of guff:

  • Maintain an appropriate level of liquidity
  • Achieve reasonable growth of money and credit
  • Will fine tune policy in a timely manner
  • Flexibly use various policy tools
  • Will increase the flexibility in both directions of the yuan exchange rate

But, also ...

  • It gave more detail on the Macro-Prudential Assessment Framework (MPA)
  • This was announced in December
  • What it will do is to make the differentiated reserve requirement more dynamic. What this does is allows the PBOC to apply different RRR to individual banks

It makes the prospects for an across the board RRR cut less likely (I am not sure by how much, and its certainly not off the table).

Goldman Sachs says of the report that the PBOC:

  • Is wary of RRR cuts adding to depreciation pressure on the yuan
  • Is also wary of large scale easing of monetary policy

It looks like PBOC policy is going to be more granular and nuanced. We'll see.