The financial world rushed to unravel the message of China: State Economy: Economy: Lenta.ru

Financiers from the world’s largest institutions rushed to unravel the message from China and its central bank (the People’s Bank of China), which they believe was encrypted in the regulator’s latest report on directions and measures of monetary policy, writes CNBC.

The interest of specialists was aroused by several phrases that were present in the first published version of the report, but soon disappeared after editing. They said the NBK would not resort to significant new monetary incentives like those used last year amid the outbreak of the coronavirus pandemic.

In subsequent versions of the report, there was no indication of the further behavior of the regulator. This prompted analysts to think that, in reality, the NBK is preparing for the forthcoming easing of monetary policy, in particular through a reduction in the key rate or programs for the purchase of government and corporate securities.

According to the chief economist of the Japanese investment bank Nomura for China, Ting Lu, such behavior of the NBK in the conditions of secrecy of the Chinese authorities in general can be regarded as an official statement about a change in the course of monetary policy. The financier noted that such behavior would be logical, since the country is experiencing the sharpest economic downturn since 2015, excluding the first half of last year.

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In addition, references to the NBK’s intentions to control the money supply – the total amount of funds owned by the population and companies (excluding financial organizations) – disappeared from the publication. Under normal circumstances, central banks seek to control the money supply through the key rate and required bank reserve ratios.

At the same time, the final version of the report retained the position of the regulator regarding the real estate market, the control of which he intends to tighten. The reason for this was the financial difficulties of several large developers at once, including Evergrande, which was on the verge of bankruptcy and had already made several defaults on bonds.