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China won’t stick to aggressive monetary easing in 2016

Market participants betting on more monetary easing in China will most likely be disappointed. That’s what state media Xinhua told in an editorial late on Wednesday. The given measure would impede efforts to diminish industrial overcapacity and also remove asset bubbles.

Market anticipation for more dips is soaring as July’s mild consumer inflation provided sufficient room for such maneuvers.

Those hoping for drops, will most likely face disappointment.

The People's Bank of China or PBOC is reluctant to get down to frequent interest rate as well as reserve requirement ratio drops in the second half of the year. Such moves would endanger the government's efforts to reform bloated industrial sectors.

Aggressive easing of the RRR along with interest rates drops will not only generate excessive liquidity but also dampen China's attempts to reduce overcapacity and also squeeze out asset bubbles, as financial experts state.


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