FXStreet (Bali) - China Premier Li may have signaled that policy easing will soon pick up speed, notes Zhiwei Zhang, FX Strategist at Nomura.

Key Quotes

"Premier Li Keqiang gave a speech on 22 May during his visit to the city of Chifeng in Inner Mongolia. He said "the economy faces downside risks and we should take it seriously", and "we should fine-tune policies appropriately".

"We believe this statement is stronger than his statements from previous speeches and indicates policy easing may pick up speed. It reinforces our view that fiscal and monetary policies will be loosened in Q2 to stabilise growth and counter the macro risks from the property market."

"We maintain our view that growth will rebound slightly in H2, to 7.4% in Q3 and 7.5% in Q4, and then drop to 6.8% in 2015 as inflation rises and reduces the scope for policy easing next year."