Late in the Tightening Cycle

Chinese policy-makers have now been tightening credit conditions for over five quarters. Deleveraging has been aggressive as short-term funding rates have risen, and the economy is starting to decelerate sharply as corporate borrowing has declined. As a result, easing steps are more likely than further tightening, interest rates are more likely to fall from current levels than rise, and the slowdown in credit growth suggests inflationary pressures will remain limited.

Posted January 9, 2018
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