CHINA TOPIX

11/02/2024 11:26:23 am

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Economists Expect China to Cut Rates in 2015

China Economy

(Photo : Carlos Barria) According to a majority of economists responding to a quarterly poll by Nikkei Inc. and NQN, China's central bank will likely lower interest rates once or twice in 2015.

According to a majority of economists responding to a quarterly poll by Nikkei Inc. and NQN, China's central bank will likely lower interest rates once or twice in 2015.

As the country's leadership is taking steps to lower its economic growth target of 7 percent, and many are expecting that an additional monetary stimulus is a must in this case despite of this slower rate.

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The second-largest economy in the world will increase up to 7 percent in real terms in 2015 and 6.9 percent in 2016. This is based on the average forecasts that 23 economists from Hong Kong and mainland China gathered in the middle of December. Their estimation for the 2014 growth rate average (GTA) of 7.3 percent didn't quite make the country's goal that is 7.5 percent.

With the dropping price of crude oil, strengthening inflation, economists are seeing growth in China's consumer price index holding still at 2.1 percent in 2015.

Louis Kujis of RBS says that China's economy is facing strong headwinds, notably falling real estate prices, along with weak export growth. It is going to be a bit of a struggle for China to make the 7 percent goal without the support coming from the macroeconomic policy.

Meanwhile, the People's Bank Of China (PBOC) lowered their interest rates for the first time in 28 months on November 2014. Economists are saying this is just the beginning of the cutting of interest rates because next year, China is about to face one or two more reductions to make their goal of reaching the 7 percent growth rate average possible.

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