Soft Chinese official manufacturing PMI could pave way for further easing – ING

FXStreet (Barcelona) - The flash HSBC manufacturing PMI painted a soft picture for the Chinese economy, and a disappointing April official PMI might lead to a 25bp policy rate cut, argues the Research Team at ING.

Key Quotes

“China’s official (CFLP) manufacturing PMI for April may reinforce concerns raised by the HSBC-Markit flash PMI, which dipped to a one-year low of 49.2 in April, that manufacturing weakness persists into the second quarter and that macro policy needs to be even more accommodative to support the 7% official GDP growth target. We think a significant downside surprise in the official PMI could be a catalyst for the next 25bp cut in PBOC policy rates.”

“We forecast a 25bp PBOC Policy interest rate cut and a 50bp RRR cut per quarter in 2015.”