PBOC said to be likely to pause RRR cuts

Author: Justin Low | Category: Central Banks

Reuters reports, but notes that policy easing remains on track

PBOC
  • Better-than-expected Q1 data reduces urgency for RRR cuts
  • PBOC likely to pause to assess economic conditions before making further moves
  • Easing bias remains unchanged but PBOC sees less room this year for cutting RRR
  • This comes with the view that fiscal stimulus plays a bigger role in spurring growth
The sources cited are government advisers involved in internal policy discussions. This will be slightly pessimistic news for Chinese investors when domestic markets open tomorrow but the fact that they are only pausing in view that the economy is holding up may help ease some nerves at least.

The only non-issue here is that China has cut RRR by 350 bps since April 2018 but it hasn't really translated into much improvement in economic conditions. Though one can also argue that the economy would be in a worse condition now have it not been for those cuts, but who's to say?

In case you need a reminder, the PBOC has already cut RRR once this year; back in January, by 100 bps.
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