Research Team at Goldman Sachs expects Chinese PPI inflation to accelerate further in the near term and CPI inflation to reach 2.5%.

Key Quotes

“Thus far, the big change has been a sharp turn in producer price inflation, which in turn has been driven by renminbi depreciation and by a rebound in global commodity prices (with selected Chinese commodity prices boosted by policies to improve pricing power for key upstream industries, particularly production restrictions).”

“Down the road, however, we see the possibility of a broader turn in inflation pressures if policymakers insist on keeping growth in the mid-6% range in an environment of falling potential growth.  Whereas historically the growth target could be thought of as an “out of the money put”, it is now a more binding constraint on policy, and has required substantial stimulus to achieve.”

“We expect interbank repo rates to remain fairly volatile in the near term, given growth has been broadly stable and policymakers have refocused on managing the leverage situation (not only in the real economy but also within the financial system). Rates are likely to ease materially only if either non-banks’ leverage in the interbank market moderates and/or economic growth slows significantly (which we anticipate for Q1 ’17), in our view. Should inflation surprise on the upside, however, upward pressure on rates may persist for even longer.”

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Feed news Join Telegram

Recommended content


Recommended content

Editors’ Picks

EUR/USD licks its wounds below 1.0820 key hurdle

EUR/USD licks its wounds below 1.0820 key hurdle

The EUR/USD pair is displaying a lackluster performance below the round-level resistance of 1.0800 in the Asian session. The major currency pair has turned sideways, following the footprints of the subdued US Dollar Index (DXY). A volatility contraction in the USD Index is expected by the market participants after a one-sided vertical move on Friday.

EUR/USD News

GBP/USD attempts to cross 1.2050, downside looks likely amid US-China tensions

GBP/USD attempts to cross 1.2050, downside looks likely amid US-China tensions

The GBP/USD pair has attempted to extend its rebound move above the critical resistance of 1.2050 in the Tokyo session. The Cable gauged an intermediate cushion around 1.2000 amid subdued performance by the US Dollar Index (DXY).

GBP/USD News

Gold rebounds but not out of the woods yet Premium

Gold rebounds but not out of the woods yet

Gold price is making a tepid recovery attempt toward the $1,900 level at the start of the week on Monday. Gold buyers a breathing a sigh of relief after two back-to-back days of extreme sell-off.

Gold News

Top 3 Price Prediction Bitcoin, Ethereum, Ripple: Is this the beginning of the end for bulls?

Top 3 Price Prediction Bitcoin, Ethereum, Ripple: Is this the beginning of the end for bulls?

Bitcoin (BTC) price is the glue that is holding this 2023 bull run intact for Ethereum (ETH), Ripple (XRP) and other altcoins. But chinks in BTC bulls’ armor are beginning to show, therefore, investors need to be cautious of a sudden reversal. 

Read more

Week Ahead – RBA next to hike

Week Ahead – RBA next to hike

After the past week’s central bank bonanza, things will quieten down in the coming days, although not completely, as the Reserve Bank of Australia will keep the rate hike theme running.

Read more

Forex MAJORS

Cryptocurrencies

Signatures