China’s central bank appears increasingly likely to ease its monetary stance in the fourth quarter, according to Goldman Sachs, as economic momentum slows and policymakers face mounting pressure to support growth.
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The forecast includes a 10-basis-point policy rate cut and a 50-basis-point reduction in the reserve requirement ratio, which could come as year-on-year growth slows sharply towards 4 per cent from a high base last year, a note released on Saturday said.
“But the data-dependent nature of PBOC decision-making leaves open the risk of no action if full-year growth stays on track for the ‘around 5 per cent’ target,” analysts said in the note.
The projection followed the central bank’s third-quarter Monetary Policy Committee meeting held on Tuesday, when officials maintained a dovish bias but offered few new signals, aligning with the second-quarter report that suggested a limited appetite for near-term easing.
“We need to better implement an appropriately loose monetary policy, strengthen countercyclical adjustments, and better leverage both the aggregate and structural functions of monetary policy tools,” the People’s Bank of China said in a meeting note posted on Friday.
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However, Goldman Sachs analysts noted a subtle shift in tone: the PBOC replaced its previous description of the economy as “showing positive momentum” with “making strides while maintaining stability” – a phrase last used in the first quarter, suggesting a more cautious outlook.
