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Macro policy easing expected
As the pace of economic growth slowed down and inflation pressure eased, analysts hold that China will pre-adjust and fine tune its macro economic policy.
They also expect the central bank to continue cutting the amount of cash that commercial lenders must hold as reserves to crank up credit expansion, but the chances of a near-term cut in benchmark interest rates look slim.
Xu Gao, chief analyst from Everbright Bank, said future macro policy should put more emphasis on infrastructure investment and he expected the further loosening of related policies in the second quarter, which will help drive the economic growth to bottom out.
"As inflation pressures continue to ease, weaker export growth is likely to prompt further easing measures, said Hongbin Qu, Chief Economist and Co-Head of Asian of Economic Research at HSBC said.
"We still expect at least another 100 basis point reserve requirement ration cuts in the first half and additional tax breaks and fiscal spending. Once the easing measures filter through, growth is likely to start bottoming out in the second quarter and rebound modestly in the second half, " Qu added.
Echoing Qus view, Ding Anhua, chief economist from China Merchants Securities Co., said given the economy and inflation are both down, the macro policy will further ease and the central bank is likely to cut the reserve requirement ratio in the first half of this year. |
