Based on recent history if nothing else, it’s likely that the People’s Bank of China will deliver additional monetary policy stimulus some time this week.
As the chart below reveals, rate cuts from the PBOC have been frequent, and regular, so far in 2015.
On June 27 they cut benchmark lending and deposit rates, along with the reserve requirement rate for banks.
Two months later, on August 25, they announced the same.
Fast forward another two months to October 23 and they did the same again.
Now it’s December 22, a further two months on. Economic and inflation measures remain subdued and the Chinese renminbi continues to weaken, suggesting that capital outflow is continuing, tightening monetary conditions.
While past performance does not guarantee future results, there’s more than enough evidence to suggest that additional monetary policy easing could be on the way.
Adding to expectations for additional policy easing, the state-run People’s Daily newspaper reported on Monday that “the central government will make fiscal policy more forceful and monetary policy more flexible to keep growth within a proper range in 2016”.