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29 Dec 2014
China: PBoC loosens policy further - Nomura
FXStreet (Bali) - Nomura reports on the latest policy move in China, in which the PBoC, as the bank notes, will allow interbank deposits and loans of non-bank financial institutions (excluding finance companies) to be included when calculating loan-to-deposit ratios, while waiving the reserve requirement for those deposits.
Key Quotes
"According to the Chinese-language China Business News, the People's Bank of China (PBoC) held a meeting with 24 major financial institutions on 24 December and reportedly will allow interbank deposits and loans of non-bank financial institutions (excluding finance companies) to be included when calculating loan-to-deposit ratios, while waiving the reserve requirement for those deposits."
"The 7-day repo rate has risen sharply in past weeks, from 3.7% on 15 December to a peak of 6.5% on 22 December. It then declined somewhat to 4.5% on 25 December. We believe that the action above is indicative of the PBoC‟s loosening bias. It could help to improve tight liquidity conditions and in turn be supportive of growth. We maintain our view that GDP growth will reach 7.3% y-o-y in Q4 2014 before it slowing to 6.8% in 2015 due to a number of structural challenges."
Key Quotes
"According to the Chinese-language China Business News, the People's Bank of China (PBoC) held a meeting with 24 major financial institutions on 24 December and reportedly will allow interbank deposits and loans of non-bank financial institutions (excluding finance companies) to be included when calculating loan-to-deposit ratios, while waiving the reserve requirement for those deposits."
"The 7-day repo rate has risen sharply in past weeks, from 3.7% on 15 December to a peak of 6.5% on 22 December. It then declined somewhat to 4.5% on 25 December. We believe that the action above is indicative of the PBoC‟s loosening bias. It could help to improve tight liquidity conditions and in turn be supportive of growth. We maintain our view that GDP growth will reach 7.3% y-o-y in Q4 2014 before it slowing to 6.8% in 2015 due to a number of structural challenges."