Goldman Sachs are looking for continuing reserve ratio cuts
Goldman Sachs economists in a in report, headlines via Bloomberg:
- China to cut reserve ratios by 50-75 bps each quarter in 2015
- In order to keep interbank liquidity conditions stable amid capital outflows
More:
- Net capital outflows "not necessarily a reflection of weak demand for a currency" (outflows reached $91bn in Q4 compared with $72bn in Q3 and $51 bn in Q2)
- "Large outflows could continue if Chinese residents continue to accumulate fresh foreign assets and/or foreigners continue to reduce" CNH holdings
- Situation in 4Q was "markedly different" as outflows accompanied by CNY depreciation and drop in FX reserves
- Draws similarity with 2Q 2012 "when concerns about China's growth outlook were intensifying:"
- Says total scale of RRR cuts needed for full-year seen at about 2-2.5 percentage points assuming liquidity needs for 2015 at about 2.5t yuan