Risks to Credit Impulse in Q4

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.

Posted August 1, 2017
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