Steady Growth Still Needs To Reduce Interest Rates And Promote CPI Breakthroughs

The price data in March will be basically unchanged from February. CPI will remain in the "1" interval, with a forecast value of about 1.3%. For PPI, most institutions generally believe that even if the downward trend of PPI prices in March is slightly improved, the actual decline is also less than 4%.

It is expected to fall slightly from last month.

In February, CPI increased by 1.4% compared with the same period last year, and the judgment given by various agencies was about 1%~1.5%.

According to data released by the Ministry of Commerce and the National Bureau of statistics, due to the weakening demand at the end of the Spring Festival holiday, the supply of vegetables increased during the warmer days, and the main food prices generally declined in the first three weeks of March.

Vegetables, eggs, pork and fish declined a lot, vegetable prices fell by more than two digits, and grain prices rose slightly.

On the whole, the price of foodstuffs will drop sharply, which is expected to be around -3.1%.

Gao Hua Securities said it expects the CPI growth in March to decrease from 1.4% in February to 1%.

In contrast, Haitong Securities's judgement is optimistic, and its forecast value is 1.5%.

Lian Ping, chief economist of Bank of communications, told reporters that in March, the price of non food could rise slightly by 0.2%, a year-on-year increase.

Lian Ping said that the median CPI rose 1.3% in March 2015, down slightly from last month.

Downward trend or slight improvement

On the PPI side, the China logistics and purchasing Federation reported that in March, production and business activities accelerated after the festival, and the construction began to start. The market demand recovered, and the effect of raising oil prices showed a slight rise of 0.66% in the month, down 10.59% from the same period last year, down 2.21% from the beginning of the year.

But Gao Hua Securities said that the negative growth of the ring may be narrowed due to stable commodity prices, but the growth rate may still be deep negative.

"PPI growth in March will probably decrease from -4.8% in February to -4.9%."

This judgment is relatively pessimistic, but most institutions generally believe that even if the downward trend of PPI prices in March has slightly improved, the actual decline is also less than 4%.

Wang Tao said that domestic fuel and chemical products prices rebounded, PMI purchase price index in the past two months also continued to improve.

However, from the high frequency data, the extent of PPI improvement is in line with the seasonal rule in previous years, so the PPI decline in March may still reach 4.5%.

How should I deal with it?

More

Looking forward to the next few months, Lian Ping said that the new food price cycle rose significantly under the new normal, and the new food price factors were weaker in the future, and the possibility of significant increase in food prices was less likely.

The price of oil is low, and the price of housing is not strong enough. It will continue to suppress the rise of non food prices.

From the perspective of recent policy trends, steady growth has become a consensus, and the major macro-control departments such as the national development and Reform Commission and the Statistics Bureau have organized high specification research teams to go all over the country to conduct special research on economic operation, and declare that they need to reserve a series of policies.

The real estate downturn has been regarded as one of the main operational risks of the macro-economy in the past year. Many ministries and commissions have substantially relaxed the real estate policy at the end of March, reduced the down payment ratio of two mortgage loans, and reduced the number of years of exemption from sales tax for housing sales.

Wang Tao commented that the loose measures that have been introduced and may be introduced in the future will help to support real estate sales and ease the decline of real estate construction activities, but it is difficult to reverse the downward trend of the industry.

"In view of the weak economic position, we believe there will be more easing measures in the coming weeks and months, including speeding up capital construction and capital appropriation, and accelerating the relaxation of reforms in service industries," said UBS.

UBS report believes that the two quarter may continue to cut interest rates, the year will be reduced to 1~2 times, thereby reducing the cost of financing the whole society, to ensure adequate domestic liquidity, fight deflation pressure, and guard against financial risks.

In the context of the financial revenue and expenditure and the worsening of cash flow in the business sector, we should further relax the credit limits such as loan amount and loan to deposit ratio.

Zhu Haibin, chief economist of JP Morgan, told reporters that further monetary policy measures may include a reduction of 50 basis points in April this year and a 25 basis point cut in the second quarter of this year.

He believes that these monetary policy measures will also ease the financing environment of the real estate market.