China’s Central Bank Outlook Fuels Calls for Policy Easing

• China’s central bank fanned expectations of further monetary policy easing, saying in its latest quarterly report that inflation pressures are “controllable,” while highlighting risks to the economic growth outlook. 
• The People’s Bank of China largely reiterated its stance of stable policy, pledging to make it more forward-looking and effective, while maintaining ample liquidity. The surge in producer inflation in the first half was likely temporary, and the domestic recovery is not yet solid, it said. 
• The fast-spreading delta virus variant is restricting travel and spending in parts of China, prompting some economists to downgrade their growth forecasts for the world’s second-largest economy. Many of them are predicting another reduction in the reserve requirement ratio for banks after July’s surprise cut, while a few are forecasting lower interest rates as well.

(Source: Bloomberg)