Monday, April 9, 2012

Goldman Sachs: China Inflation May Limit Policy Loosening

Uh, no kidding.

This is what I wrote in the December 22, 2011 issue of the EPJ Daily Alert (new bold):

It is no longer a secret the Chinese economy is in trouble...

More Chinese bankers are forecasting a further loosening in monetary policy as economic growth slows.About 14.4 percent of bankers expect more monetary policy easing, compared with 3.5 percent in last
quarter’s survey by China's central bank. About 56 percent predict the current policy bias will be maintained.

At some point the PBOC may ease policy, but it will be too little too late. Sinceh. the PBOC was printing money at near 30% rates for some time an easing that increases money growth to 15% annualized won't be
enough to prop up the old structure. BUT it will continue to fuel price inflation and intensify civil unrest---which is the real check that's stopping the PBOC from returning to 30% money growt


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