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China c.bank to tread warily on easing amid stagflation risk – policy sources

Mount Equity Group Tokyo, Japan > News > Markets > China c.bank to tread warily on easing amid stagflation risk – policy sources

BEIJING, Nov 8 (Reuters) – China’s central bank will likely move cautiously on loosening monetary policy to bolster the economy, as slowing economic growth and soaring factory inflation fuel concerns over stagflation, policy sources and analysts said.

Momentum is faltering in the world’s second-largest economy due to fresh curbs to control COVID-19 outbreaks, power shortages that have hit factories and a debt crisis in the real estate sector, among other factors that have gummed up activity.

Chances of a rate cut look slim, but the central bank may opt to cut the amount of cash banks must hold as reserves against their loans if growth suffers, according to sources involved in internal policy discussions.

Economic growth is widely expected to slow further in the fourth quarter from a one-year low of 4.9% in the third quarter. Factory activity shrank for a second month in October, an official survey showed, while factory output…

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