China may further cut RRR, policy rates; fiscal support to pick up – research

 

>>REAL-TIME UPDATES IN THE WIRE. CLICK HERE<<<

 

 

China’s credit growth in August picked up more than expected, with household loans and government financing both improving, said CCB International in a note, adding that the pickup in new bank lending and the acceleration of government bond issuance were major driving forces.

The improvement in medium- and long-term loans to the household sector was likely resulted from the recent policy easing, while the faster government bond issuance indicates that the authority is stepping up fiscal support, said the broker owned by China Construction Bank.

China’s recent supportive policy measures will help stabilize domestic demand over the coming few months, with further monetary policy easing expected, it said.

Banks’ reserve requirement ratio (RRR) and policy interest rates will likely be cut further, it said.

The magnitude of fiscal support, such as fiscal spending, tax cuts and accelerated government bond issuance, is expected to increase as the government seeks to shore up demand and in addition, continued policy easing for the property sector should help stabilize home transactions, it said.