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BEIJING - China is expected to keep its stimulus
measures including interest rate cuts in 2016 to underpin economic growth,
Bloomberg economists has said.
"The central bank will likely make two 25 bp
cuts in the loan rate and multiple cuts in the reserve requirement ratio in the
first half," said the economists in a report called "China's Economy
in 2016" reached Xinhua reporters late on Friday.
However, "space for rate cut is limited as the
deposit rate approaches zero," according to the Bloomberg report.
Benchmark interest rates for one-year lending and
deposits stand at 4.35 percent and 1.5 percent respectively after a 0.25 percentage
point cut in this October.
To combat an economic slowdown, China's central
bank has cut benchmark interest rates five times since last November and
lowered banks' reserve requirement ratio three times since February.
The Ministry of Finance has accelerated public
spending and rolled out a 3.2 trillion yuan $494 billion debt swap for
in-the-red local governments, the Bloomberg report said.
"Most recently the yuan has fallen 2.4 percent
to 6.4726 in mid-December from 6.3174 at the end of October," said the
report.
To add liquidity, the Bloomberg report forecast
that China's reserve requirement ratio will come down from the current 17.5
percent level next year.
The Bloomberg economists expected more pro-growth
exchange rate and fiscal policy adjustments next year, adding that China has
"enough policy space to keep GDP growth "close to 7 percent, but not
for much longer."
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