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Sep 15, 2014
China: Expect 50bp RRR cut/quarter until Q4 2015 - Nomura
FXStreet (Bali) - Following weak Chinese data over the weekend, Nomura Economists now expect Q3 growth of 7.2% and one 50bp RRR cut per quarter from Q3 2014 to Q4 2015.
Key Quotes
"Core activity data weakened significantly in August, with industrial production and fixed asset investment growth falling to 6.9% y-o-y (from 9%) and 16.5% y-o-y (ytd; from 17%), respectively."
"The property sector correction deepened, with floor space sold declining at a faster pace of 8.3% y-o-y (ytd) after a decline of 7.6% in July."
"We cut our Q3 GDP growth forecast to 7.2% y-o-y from 7.5%, and still see downside risks to this forecast."
"Because we expect more aggressive policy easing, we maintain our 7.6% Q4 growth forecast, which would result in a slightly lower full-year 2014 growth forecast of 7.4% (Previous: 7.5%)."
"We now expect one 50bp RRR cut in each quarter from Q3 2014 through Q4 2015. It is not our base case, but if growth decelerates further in coming months, we would expect further, substantial easing measures, including an interest rate cut."
Key Quotes
"Core activity data weakened significantly in August, with industrial production and fixed asset investment growth falling to 6.9% y-o-y (from 9%) and 16.5% y-o-y (ytd; from 17%), respectively."
"The property sector correction deepened, with floor space sold declining at a faster pace of 8.3% y-o-y (ytd) after a decline of 7.6% in July."
"We cut our Q3 GDP growth forecast to 7.2% y-o-y from 7.5%, and still see downside risks to this forecast."
"Because we expect more aggressive policy easing, we maintain our 7.6% Q4 growth forecast, which would result in a slightly lower full-year 2014 growth forecast of 7.4% (Previous: 7.5%)."
"We now expect one 50bp RRR cut in each quarter from Q3 2014 through Q4 2015. It is not our base case, but if growth decelerates further in coming months, we would expect further, substantial easing measures, including an interest rate cut."