China’s monetary policy: “Targetted easing” is to continue

HONG KONG - On the heels of recently released disappointing July credit data, China’s State Council has announced a set of guidelines seeking to reduce high funding costs in the corporate sector  and to spur credit growth in support of economic growth. The announcement gives a preview of  monetary policy stance in the second half of the year, which seems to stick to “targeted easing” as in the first half, says BBVA Bank.

“In addition, the authorities might become more cautious about advancing interest rate liberalisation, which we previously projected to be completed before the end of 2015,” BBVA says. “Overall, we envision that the authorities will employ various monetary policy tools to sustain full-year growth of banks loans at a pace of 13%-14%, which should be sufficient to achieve a GDP growth target of 7.0-7.5% for 2014.”  www.bbvaresearch.com (ATI).