PBOC to continue with selective easing

In recent months, rising nominal rates and falling inflation (0.8% yoy in January), have caused real rates to increase, whereas growth continued to slow and liquidity tightened as a result of PBOC intervention to prevent capital outflows.
 
As a result, the PBoC cut banks required reserve ratio (RRR) and policy rates in February.
 
Societe Generale notes as follows on Monday:

• The net effect remains limited and we expect the central bank will need to provide further selective easing in the future with liquidity injections, including RRR cuts.
• There could also be easing measures in the housing market to stave off a sharper property crash. However, we don't expect China will join the currency war, with only modest yuan depreciation expected vs the USD