HALISTER1: China Sees No Deflation Pressure; PBOC Not to Ease This Yr: BNP

China Sees No Deflation Pressure; PBOC Not to Ease This Yr: BNP

(Bloomberg) -- PPI returning to positive territory is unexpected, after remaining in contraction for almost five years BNP economist Jacqueline Rong says.
  • NOTE: China Sept. CPI rises 1.9% y/y, vs est. 1.6%; PPI rises 0.1% y/y, vs est. -0.3%; PPI had been negative since Feb. 2012
  • PPI recovery is built on strength in commodities, especially coal
  • CPI also back to ~2% targeted level, after a weak August reading on low base effect
  • Sept. PPI and CPI indicate China faces no deflation risk; sees no need for PBOC to cut interest rate this year
    • But RRR cut remains possible, since yuan sees strong depreciation pressure, could fuel capital outflow
  • Expects 3Q GDP to be unchanged at 6.7%
    • Sept. fixed asset investment should pick up
  • China 3Q GDP data due on October 19; survey here
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

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Jacqueline Rong (BNP Paribas SA)

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