Credit Suisse says macro data stabilize 4 quarters or raise interest rates

The August macroeconomic data show better than expected economic growth, but there is no point in judging the economic slowdown, Credit Suisse reported September 13. Although inflation has widened real negative interest rates, the regulatory level will not change in the short term.　　The increase in reserve requirements will be preceded by a rise in interest rates, which will increase by 27 basis points in the 4 quarter, and a 50 basis point for the reserve requirement ratio. While the impact on the CPI may soon be over, its impact is unlikely to disappear soon, Credit Suisse reported. The outbreak of foot-and-mouth disease, for example, led to the slaughter of pigs in the first half of 2010, which could lead to suspended in 2011. International capital is speeding into the Chinese grain buying market, raising food prices for food, eggs and garlic. Although economic growth is slowing, rising food prices will keep inflation rates high.　　In addition, housing rents continue to rise in many cities. Credit Suisse predicts that, despite a high base, CPI growth will reach 3.5-4% by the end of 2010. Inflation is likely to continue to accelerate until pork prices begin to return to normal in the 1 quarter or 2 quarter of 2011.　　In addition, changes in rents may also be an uncertain factor.　　Report analysis, PPI growth of 4.3%, a 3 consecutive months of decline, reflecting the decline in economic growth and raw material prices decline, however, the PPI price basket does not include the recent increase in migrant workers. Credit Suisse said that if inflation in the next 6 months were likely to remain 3-4%, it would make only 2.25% of the 1-year deposit rate look awkward.　　Sticking to real negative interest rates could push more bank deposits into the property market and create more asset bubbles. Although inflation has widened real negative interest rates, Credit Suisse believes the central bank is unlikely to raise interest rates in the near future.　　While the August macro figures show some signs of macroeconomic stabilisation, the government may avoid the use of landmark austerity measures in order to maintain confidence.　　Credit Suisse predicts that regulators are more likely to take administrative measures to curb inflationary pressures, such as delaying increases in the prices of utilities and fuel and curbing speculation in agricultural sales. Credit Suisse judged that the government would be tougher in its approach to inflation if home prices were to rise again or the CPI would grow by more than 4%. Credit Suisse believes the current CPI level is clearly unsettling for the authorities, but they may be more concerned about the restructuring of the economy. The delayed introduction of quantitative easing by the Federal Reserve also provides a reason to wait.　　The increase in inflows of hot money abroad also makes the authorities wary of widening the gap with US interest rates. As a result, the report predicts that the increase in reserve requirements will be preceded by higher interest rates, but this will tighten the liquidity of small banks. The change in the reserve requirement ratio now has a greater impact on banks that do not have a strong deposit base because they have fewer excess reserves. Credit Suisse expects a 27-point increase in deposit-and-loan rates by 2010 in the 4 quarter, and the next rate hike will be 2011 year 1 Quarter and 2011 later. The deposit reserve ratio will increase by 50 basis points in the 4 quarter of 2010.