Some analysts are reading changes in the language used by Chinese officials as giving warning of rate hikes ahead.
Reuters have a quick report up on the changes:
- “The Conference changed the tone of prudent monetary policy to be ‘reasonably proper’, called for a largely stable macro leverage and M2 and TSF growth to be ‘compatible’ with nominal GDP growth,” Wang Tao, chief China economist at UBS, expecting a small policy rate hike in the second half of next year.
- Julian Evans-Pritchard, senior China economist at Capital Economics, said in a note that subtle changes in language have flagged forthcoming policy shifts in the past and therefore he expected PBOC policy rates to rise by 30 bps in 2021.
We have already seen signs of an improving economy in Chinese data but I’d not be in a hurry to be expecting rate hikes soon.