Comments from Ma Jun, chief economist of the PBOC research bureau in the Financial news (via MNI):
- Says current inflation is still low
- PPI's declines in April and May were particularly sharp, leaving real interest rates higher than the historical average
- Says weekend rate cut was needed to maintain stable real interest rates and neutral monetary conditions
- Says current overall liquidity is ll ample & excess reserves are close to historical highs
- No need for a broad cut in banks' deposit reserve in the short-term
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Its worth being aware that the People's Bank of China cut interest rates and instituted target cuts to the required deposit reserve ratio over the weekend.
This is likely indicative over their concern re the falls in Chinese stock markets.
Its unusual to adjust both of those policy levers at the same time.
