PBOC: Intensity of easing more than expected - Nomura

FXStreet (Bali) - The Asian Economics Team at Nomura notes that while the timing of the PBOC policy move is in line with their expectations, the intensity of easing is more than expected.

Key Quotes

"The People’s Bank of China (PBoC) has lowered the reserve requirement ratio (RRR) for banks by 100bp, effective 20 April 2015. It has also implemented an additional 100bp cut for rural credit cooperatives and village and township banks as well as a 200bp cut for China Agricultural Development Bank."

"The RRR for rural cooperative banks is lowered to the same level as for rural credit cooperatives. For state-owned banks and joint-equity commercial banks that meet the standards to support small and micro enterprises as well as the agriculture sector, their RRR could be 50bp lower than financial institutions in the same category."

"The timing of this policy move is in line with our expectation, but the intensity of monetary easing is more than expected. The policy move is justified by the current economic situation – weak growth momentum and rising deflationary pressure."