Friday, August 12, 2016

July data then drop cut it Not bad enough to require the use of monetary policy

The latest series of economic and financial data for July is not satisfactory, successive sing loose coupled with overseas markets, and once again ignited the market for China's future monetary policy debate, calls for further easing of monetary policy sound also rises.

National statistics released data showing July above-scale industrial added value grew by 6%, July fixed-asset investment rose 8.1% before and the lowest level since December 1999. New loans in July data released by the Central Bank later, then hit a two-year low.

"6% July industrial production growth, lower-than-expected investment continued to fall, consumption fell below expectations. "Shanghai Hongyuan, Economist Li Huiyong, analyst says:" economic fall markedly, easing still overweight, should focus on the implementation of the proactive fiscal policy, political easing of domestic space. In view of the effects of lag, loose need to lead, should be the sooner the better. "

Early last week, the policy research Office of the NDRC on August 3 in its first entitled better play the critical role of investment to the economic growth of the article, also unequivocally pointed out: "the firm reduce costs. Looking to implement further interest rate cuts, reducing policies. " SOFTBANK even put aside assets to raise to 31

However, in week two, the Bank reiterated that it will continue to implement a prudent monetary policy, economists tend to believe that central banks will not be easily resorted to drop, and even cut-weight loose policies.

In the second quarter monetary policy report, the Central Bank also pointed out that as a column, frequently drop will increase pressure on devaluation.

In the Central Bank's view, if frequently drop will commit substantial liquidity, market interest rates downward, combined with its strong signal meaning, easy to strengthen expectations of easing, leading to currency devaluation pressures, decline in foreign exchange reserves. Release reduction, the liquidity more currency devaluation expected the stronger, the more he prompted speculators to take the money to buy meeting chaohui, which form a cycle. Therefore, the need to focus on potential balance sheet effects of policy instruments used in the, pay close attention to developments in the internal and external situation, maintain a neutral moderate monetary and financial environment, promote balance and economic and financial running smoothly.

Societe Generale Chief Economist, Lu zhengwei surging to journalists said: "and the whole second half of the third quarter, the Central Bank will not cut interest rates further down, action, second-quarter monetary policy report very clearly show that high prices may now transfer this to the other, and to curb asset bubbles, so it will not cut interest rates. "

Despite a series of economic data due out August 12 is borderline, but tend to think more bodies, banks or stay put.

"At present, data in the real economy is not good, but not bad enough to require adjustment of monetary policies and monetary policy is still relatively neutral tone of. "China Merchants securities Economist Xie Yaxuan surging on news, analyst said.

Haitong securities Economist Jiang Chao, analyst say, compared monetary policy, exerting force with positive financial need.

"In July the decreasing trend in the industrial economies slow, weighed down by early weakness in demand, industrial growth eased early backing declining investment infrastructure is falling sharply. Monetary policy report, the Central Bank said it would continue to implement a prudent monetary policy, monetary policy remains neutral in the short term, still need active financial force, backing the economic downturn. "Chao Jiang said.

Regulators of differentiation of the monetary policy stance, Lu zhengwei stressed that the report of the national development and Reform Commission published by the policy research is a regular, and the theme of investment, rather than a comprehensive analysis of the macroeconomic situation, and monetary policy, report of the national development and Reform Commission is more constructive.

"Monetary policies of different sounds, on the face of it, monetary policy decisions are made by the Central Bank, so more listen to the Central Bank's monetary policy statement and the judgment of the situation, but in the end, monetary policy is ultimately determined by the economy, inflation, asset price and other factors, is also fundamental decisions on monetary policy. "Xie Yaxuan said.

For now include United Kingdom Central Bank, Japan's Central Bank, a number of key Central Bank easing launched in succession, Xie Yaxuan pointed out that, given the spillover effects of monetary policies in developed countries, successive interest rate cuts overseas central banks is restrictive monetary policy to one of the reasons.

"But focus is complex, after all, some countries shrinking, on China's interest rates, exchange rates, and capital flows have an impact on several levels, the change of overseas situation of China's Central Bank monetary policy challenge, but such challenges as a whole still need to go through the fundamentals. "Xie Yaxuan said.

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