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China’s inflation suggests more liquidity easing

Inflation figures released today extend Beijing's license to ease liquidity policy further in coming weeks (CC Jan 12 Macro View) and further relieves manufacturers from the big margin squeeze that characterised 2011 (CC Jan 12 Consumer China).

China's inflation cools YoY and MoM in August

Pork prices ease, driving down CPI

Inflation and growth suggest further tightening

China's inflation rate in March, coupled with a rebound in M2 money supply and a fairly robust Q1 GDP growth rate suggest further policy tightening in Q2 this year, coupled with redoubled official scrutiny toward the property market. We think that a further hike in interest rates is possible (CC Apr 7, Macro View) and another increase in the bank required reserve ratio is likely.

Tightening losing thrust

It is possible that China's tightening campaign is starting to ease as a clear economic slowdown emerges.

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09 Feb 2012

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