The PBOC has continued to ease monetary policy via interest rate and required reserve ratio cuts, but balance of payments pressures and weak credit demand have impaired policy transmission. A stabilization of economic activity at the end of 2015 depends heavily upon a pickup in credit growth, but several factors suggest risks to the near-term credit impulse, including the decline in equity market-related interbank assets, the large proportion of short-term bill financing loans extended, and ironically, the fall in corporate bond yields and interbank market rates.
