The prolonged price drop in China has increased the risk that the deflation mentality will be rooted. Those responsible for politics have intensified efforts to expand effective demand; The zero rate and quantitative flexibility are not on the agenda. The recent high -level meetings aimed at disorderly competition foresee more actions on the side of the offer, in our opinion. More market -based measures are expected this time; The IPP could become positive in 6-12 months, Standard Chartered economists report.
When excess supply becomes a problem
“Those responsible for politics in China are increasing Nominal has been below the real expansion during nine consecutive quarters, contributing to the expansion of the GDP gap between the US and China in recent years despite the greatest real growth in China.
“To boost domestic demand, the authorities adopted an expansive budget and changed to a” moderately flexible ‘monetary policy position this year. However, it seems that there is no appetite for a bazuca type stimulus due to considerations of efficiency, social equity and sustainability. We do not believe that China resorts to zero interest rates, quantitative flexibility (QE) or devaluation of the CNY to revert Deflation. “
“The recent calls of the main leaders to rectify the ‘involution’ and the disorder IPP inflation becomes firmly positive. “
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
