China may see a cumulative 100bps RRR cut by mid-2015 – DB

FXStreet (Barcelona) - The Research Team at Deutsche Bank expect that in order to stabilize the Chinese economy the government might further cut interest rates by 25bp in Q2 and 25bp in Q3 2015, and cut the RRR by a cumulative 100bps by mid-2015.

Key Quotes

“Growth momentum remains weak as property investment growth continues to slow. We expect growth to trend down in Q4 2014 and H1 2015. In Q1 2015 GDP growth may drop to 6.8% yoy.”

“The policy easing cycle has started. We expect the government to cut benchmark interest rates further by 25bp in Q2 and another 25bp in Q3 2015 and cut the RRR by a cumulative 100bps by mid- 2015 to stabilize the economy.”

“We expect growth to pick up slightly in H2 2015, and full year growth to reach 7%.”