RHB | China | Not The End Of Monetary Easing

Economic Research	26 October 2015
China
Economic Highlights
Not The End Of Monetary Easing The People’s Bank of China announced to cut its benchmark interest rate by 25bps and also lowered the required reserve ratio (RRR) by 50bps for all of the financial institutions. The new rate/ratio took effective from 24th Oct, 2015. Meanwhile, the central bank finally removed the ceiling for deposit rate, signalling the interest rate liberalisation process has eventually completed. Looking ahead, we still expect one more RRR cut (50bps) in 2015 and 200-250bps RRR cuts in 2016, as a measure to offset capital outflows given potential rate hikes in the US and a mild depreciation for CNY. We also do not rule out the possibility that the central bank will cut the interest rate by another 25bps in 1H16 to lower borrowing cost for corporates. Economist:  Zhang Fan| +8621 6288 9611 ext 105
To access our recent reports please click on the links below: 16 Oct: Heading South 15 Oct: Mild Inflation Provides Room For Easing 12 Oct: Remain Cautious For China’s Trade Condition 01 Oct: Slightly Improved, But Far From Enough 23 Sept: Downside Pressure Remains For Manufacturing Sectors 14 Sept: Economic Growth Remained Muted