China banks, brokerages see no RRR cuts in March
Friday, 2 March 2012
BEIJING, March 1 (Reuters): Chinese financial institutions expect the central bank to cut banks' reserve requirement ratio (RRR) sometime in the next three months, but not in March.
Nearly three quarters of the domestic banks, brokerages and other financial institutions participating in Reuters' monthly fixed-income poll believe there will be no RRR cut during March.
But more than 70 per cent believe that a 50-basis-point cut will occur sometime in the next three months. China cut RRR by 50 bps on February 18.
Respondents agreed unanimously that the People's Bank of China will not lower the benchmark one-year bank deposit rate in March. But a minority, 20 per cent, believe that bank deposit rates will be lowered by 25 basis points to 3.25 per cent sometime in the next three months.
As support for their predictions, respondents cited February's five-month high official purchasing manager's index (PMI), improving economic prospects in the United States and Europe; and the risk of inflation caused by rising world oil prices as reasons for their predictions.
Despite the relatively cautious outlook for monetary policy, respondents expect bond yields to fall. On average, they expect the yield on 10-year government bonds to fall by 5 basis points, compared with the end of February, to 3.48 per cent.
Respondents said the large increase in central bank bills and repurchase agreements due to expire in March compared with February will support interbank liquidity this month, even in the absence of an RRR cut.
Nearly three quarters of the domestic banks, brokerages and other financial institutions participating in Reuters' monthly fixed-income poll believe there will be no RRR cut during March.
But more than 70 per cent believe that a 50-basis-point cut will occur sometime in the next three months. China cut RRR by 50 bps on February 18.
Respondents agreed unanimously that the People's Bank of China will not lower the benchmark one-year bank deposit rate in March. But a minority, 20 per cent, believe that bank deposit rates will be lowered by 25 basis points to 3.25 per cent sometime in the next three months.
As support for their predictions, respondents cited February's five-month high official purchasing manager's index (PMI), improving economic prospects in the United States and Europe; and the risk of inflation caused by rising world oil prices as reasons for their predictions.
Despite the relatively cautious outlook for monetary policy, respondents expect bond yields to fall. On average, they expect the yield on 10-year government bonds to fall by 5 basis points, compared with the end of February, to 3.48 per cent.
Respondents said the large increase in central bank bills and repurchase agreements due to expire in March compared with February will support interbank liquidity this month, even in the absence of an RRR cut.