On China's credit numbers - ING wants to see a RRR cut to maintain strong credit growth

Author: Eamonn Sheridan | Category: News

Post on the China numbers here: ICYMI - latest numbers show China credit growth surging

Comments from ING:
  • PBOC wants credit creation to support the economy
  • We believe a cut in the reserve requirement ratio is needed to maintain strong credit growth
  • it is usual to have high credit growth in the first quarter of the year in China
  • the growth is surprisingly high and a clear sign to us that this is to support the economy
  • loans from banks are still the largest contribution of total credit for the economy … likely the result of central bank efforts to help small private firms to get funding from banks
  • As such, the credit diversion to small private firms should reduce the risk of a slump in the job market
The second largest credit creator was the debt market, facilitating fundraising for infrastructure 
Ahead:
  • by 17 April a sizeable liquidity injection expire and there will be tax payments around mid-April . Usually, this would create some tightness in the interbank market. This should allow the central bank to cut RRR by 0.5 percentage points to 13.0%.

China credit growth RRR rate cut


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