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PBoC likely to continue with enhancing liquidity fine-tuning and keeping tightening bias - Barclays
The People’s Bank of China is expected to carry on with enhancing liquidity fine-tuning while maintaining a tightening bias in both monetary and regulatory policy, as long as growth continues to be more than 6.5 percent, noted Barclays in a research report.
While the central bank lowered its target for banks’ reserve requirement ratio, it is not viewed as the central bank turning toward an easing bias as there is no urgency or necessity for the central bank to undertake such a path, stated Barclays.
Strong economic growth, the likely acceleration in consumer price inflation, solid PPI inflation and lowered pressures for capital outflows and CNY depreciation, imply that the PBoC would continue to maintain its monetary and regulatory policy tightening bias, and remain committed to encouraging deleveraging and controlling risk during the quarters ahead.
In the meantime, the Party Report underlined the improvement in macro policy coordination and stated that regulation is preferred over liberalization. The report stated that China would create new methods to enhance macro regulation, and improve mechanisms for coordinating fiscal, monetary, industrial and other economic policies.
At 14:00 GMT the FxWirePro's Hourly Strength Index of Chinese Yuan was slightly bearish at -72.5372, while the FxWirePro's Hourly Strength Index of US Dollar was neutral at 37.9889. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex