BEIJING,(Xinhuanet) -- Monday¡¯s RRR cut by the PBOC comes ahead of Tuesday¡¯s inflation data release out of China. The rise in Chinese consumer inflation will mean policy makers have to deliver ¡¯not too cold, not too hot¡¯ easing measures through 2014.
Producer prices are tipped to remain well in deflation, which bolsters the argument to warm things up with additional stimulus. Complicating things though - a likely re-heating up of consumer prices in May, which are forecast to climb 2.4 percent year on year.
Nonetheless, the balance of risks points to at least some additional easing, according to Edmond de Rothschild¡¯s David Gaud.
"We will see probably gradual announcements, maybe a revision down in the loan to deposit ratio for some banks. What¡¯s interesting is when you look within the emerging world, actually you see a slowdown in the lending rates, in lending growth rates across large numbers of countries, except China, where things are finally stabilizing, and potentially improve into the second half." David Gaud, Senior Portfolio Manager of Edmond De Rothschild Asset Management said.
In another indicator of the domestic economy¡¯s health, we¡¯ll also get May auto sales data for China.
The world¡¯s largest car market. Expect growth in the eight to 10 percent range. In the Philippines, watch for April export data this Tuesday (June 10).
A brisk trade in electronics and semiconductors has kept outbound shipment growth in the double digits for five of the last six months. Also expected, New Zealand manufacturing sales for the quarter - which should register strong growth on demand for dairy and meat products exports to Asia¡¯s growing consumer base.