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15 May 2013
Forex Flash: Chinese Premier acknowledges limited room for policy easing - Nomura
FXstreet.com (Barcelona) - Nomura economist Zhiwei Zhang notes that Premier Li said in a State Council meeting that the government cannot rely on expansionary policy to achieve its growth target as room for policy easing is limited, according to the Shanghai Securities Journal today.
Zhang notes that he said that the government should trust the market economy to be capable to correct the cyclical movement by itself, and that government intervention may lead to unintended consequences. Further, he adds that Premier Li's comments reinforce his view that policy easing is unlikely, at least in Q2, and that growth will likely trend down to 7.5% in Q2 and 7.3% in H2, while consensus expects a recovery in Q2 to 8%.
Zhang notes that he said that the government should trust the market economy to be capable to correct the cyclical movement by itself, and that government intervention may lead to unintended consequences. Further, he adds that Premier Li's comments reinforce his view that policy easing is unlikely, at least in Q2, and that growth will likely trend down to 7.5% in Q2 and 7.3% in H2, while consensus expects a recovery in Q2 to 8%.