Policymakers have to walk a tight rope as the yuan has come under pressure after U.S. President Donald Trump's tariff onslaught, while shrinking interest margins at lenders has continued to limit the scope for monetary easing.
In a Reuters survey of 31 market watchers conducted this week, 27, or 87% of all respondents expected both the one-year and five-year LPRs to remain steady, while the remaining four participants projected a reduction of 10 to 15 basis points to the five-year rate.
China last cut its policy rate in September and benchmark LPRs in October.
“They will need to lower the deposit rates first.”
China's gross domestic product (GDP) grew 5.4% in the first quarter, beating expectations, but markets fear a sharp downturn in the year ahead as U.S. tariff policies pose the biggest risk to the Asian powerhouse in decades.
Trump has raised tariffs on Chinese goods to a massive 145%, prompting Beijing to retaliate with higher 125% duties on U.S. goods in a tit-for-tat trade war that has roiled investors.
Any moves to boost stimulus, however, will require policymakers consider the impact on the yuan, which is down 0.4% against the dollar since Trump's April 2 announcement of global tariffs.
He said Nomura is maintaining its forecasts for a 50-basis-point reserve requirement ratio (RRR) cut and a 15-basis-point rate cut in the second quarter.
However, “if U.S.-China tensions flare up sharply, triggering substantial stock market selloffs, the People's Bank of China (PBOC) could still quickly respond with RRR cuts to shore up market sentiment, like the case in May 2019,“ Lu added.
Read More Details
Finally We wish PressBee provided you with enough information of ( China set to leave lending rates steady, but tariffs raise easing bets )
Also on site :