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China, further easing looming? – Danske Bank

FXStreet (Edinburgh) - Analysts at Danske Bank see the likeliness of further stimulus in the Chinese economy in the wake of the recent inflation figures.

Key Quotes

“In China, inflation data undershot expectations declining to 2% y/y in August (consensus 2.2% y/y) from 2.3% y/y in July”.

“This is still far below the target of 3.5% and together with declining house prices it gives ample room to ease policy if needed to support economic growth”.

“Chinese activity indicators have softened a bit in the past months but comments from premier Li Kiquiang do not point to immediate easing measures”.

“At the World Economic Forum in Tianjing, Li said that the “economy is operating within a reasonable range”.

“He also said that their target was around 7.5% and that could mean sometimes a little above and sometimes a little below”.

“He highlighted that China had resorted to ‘strong reform’ instead of ‘strong stimulus’ to spur the economy”.

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