China expected to introduce easing policy in coming weeks, especially on fiscal, housing and consumption fronts – Goldman Sachs
MACRO POLICY & REGULATION
China expected to introduce easing policy in coming weeks, especially on fiscal, housing and consumption fronts – Goldman Sachs
MACRO POLICY & REGULATION

China expected to introduce easing policy in coming weeks, especially on fiscal, housing and consumption fronts – Goldman Sachs

 

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The People’s Bank of China (PBOC) on Tuesday cut the one- and five-year LPRs concurrently by 10 basis points to 3.55% and 4.2%, respectively, in a move to lower borrowing cost, boost loan demand and spur economic growth. 

While the cut is in line with Goldman Sachs’ forecasts, it might be disappointing for some forecasters who expected a deeper cut of at least 15 bps to the 5-year LPR in order to shore up the property sector, the bank said in a note.

The bank continued to expect more easing policy measures in mainland China in the coming weeks, especially on fiscal, housing and consumption fronts, although the stimulus should be smaller than previous easing cycles, it said. 

Given the more challenging long-term demographic trends, already high debt levels, and the policy stance of “housing is for living in, not for speculation”, the easing of housing policies is expecte to be limited, it said.