2015-02-27

Market Expects March Rate Cuts

The market expects the PBOC will cut interest rates in March in order to combat deflationary forces tearing through the economy.
市场对通缩局面担忧趋严重 消息称3月份降息临近
Increased risk of deflation in the market place expectations on monetary policy. While several agencies have told the reporter to predict the future monetary policy will be mainly neutral, but the market for a rate cut as soon as the voice more and more. And a source told the newspaper reporter, said March rate cut was imminent.

CRE Securities research director Zhong Zhengsheng macroeconomic forecasting to the reporter, according to the central bank's monetary policy report, monetary policy remains neutral, but that does not mean that will not cut interest rates, in fact, including the new monetary policy tools included, as well as lower interest rates and a series of prospective liquidity management are integrated into the central bank's monetary policy options. With the intensification of market expectations for the Fed to raise interest rates in the second half, then the corresponding, our expectations of a rate cut RRR should be in the first half.
Some analysts think other measures, such as RRR cuts, may have more impact or may be needed in addition to interest rate cuts. Whatever the policy choice, expectations are high for monetary easing next month.

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