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%.
