By Tyler Durden
Last Friday, just as markets were set to crater, during a meeting with IMF Managing Director Kristalina Georgieva, China’s Premier Li hinted at a potential RRR cut in the near term to support the real economy. Li’s comment comes amid sluggish activity growth – the economy struggled with downward pressures from property slowdown, the lingering drag from âdual controlsâ policy and power shortage, and multiple waves of local outbreaks of Covid-19.
Specifically, Premier Li commented that “China would maintain prudent macro policy, enhance policy effectiveness and pertinency, keep liquidity at reasonable and adequate levels, cut RRR when appropriate to increase support to the real economy and in particular SMEs”.
In its take of Li’s remarks, Goldman’s Chinese economists said that they think PM Liâs comment implies “a targeted RRR cut is very likely in the near term,” and they go on to note that “based on previous experiences, after Premier Liâs comment, PBOC usually announces the actual cut within a week.” That said, the net liquidity impact may depend on whether the central bank rolls MLF in full on December 15th when RMB 950bn loans will mature. It also means that the cut will likely take place before the 15th.
Daily News PDF Archives – Jellyfish.NewsÂ