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No rate cut and just 1 reserve ratio trim
By Jane Feng |
September 19, 2012, Wednesday
|
Print Edition
Print Edition
CHINA may not cut interest rate in the rest of this year and is likely to lower bank reserve requirement only once this year, a Standard Chartered Bank report said yesterday.
Policy makers are more tolerant of the current economic slowdown, the report said.
The report was released amid concerns over how Chinese monetary policy makers may respond to the recent US Federal Reserve's quantitative easing decision.
"The People's Bank of China seems to believe that interest rates are already at an appropriate level, and if they need to go lower, banks themselves have the freedom (to cut)," the report said.
Banks can cut lending rate by 30 percent off the benchmark and raise deposit rate by 10 percent as the PBOC loosens its grip on interest rates this year.
The report superseded the UK bank's previous forecast that China has room to cut interest rate once this year to counter global economic weakness.
"Indeed, we believe that the next move will be in late 2013 as the official CPI (consumer price index) pushes above 5 percent year on year," the report said. "After one hike in Q4 of 2013, we look for four more hikes in 2014."
On the reserve requirement ratio, the report said the PBOC may cut it once this year, instead of three times as previously forecast, as the interbank money rate has reached a desirable level. The bank doesn't expect a reserve ratio cut in 2013.
Standard Chartered has cut forecast for China's economic growth to 7.7 percent, down from its previous outlook of 8.1 percent. Its forecast for 2013 growth also fell from 8.7 percent to 7.8 percent.
Policy makers are more tolerant of the current economic slowdown, the report said.
The report was released amid concerns over how Chinese monetary policy makers may respond to the recent US Federal Reserve's quantitative easing decision.
"The People's Bank of China seems to believe that interest rates are already at an appropriate level, and if they need to go lower, banks themselves have the freedom (to cut)," the report said.
Banks can cut lending rate by 30 percent off the benchmark and raise deposit rate by 10 percent as the PBOC loosens its grip on interest rates this year.
The report superseded the UK bank's previous forecast that China has room to cut interest rate once this year to counter global economic weakness.
"Indeed, we believe that the next move will be in late 2013 as the official CPI (consumer price index) pushes above 5 percent year on year," the report said. "After one hike in Q4 of 2013, we look for four more hikes in 2014."
On the reserve requirement ratio, the report said the PBOC may cut it once this year, instead of three times as previously forecast, as the interbank money rate has reached a desirable level. The bank doesn't expect a reserve ratio cut in 2013.
Standard Chartered has cut forecast for China's economic growth to 7.7 percent, down from its previous outlook of 8.1 percent. Its forecast for 2013 growth also fell from 8.7 percent to 7.8 percent.
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