A observe from Morgan Stanley, writing within the Monetary Occasions.
The FT is gated however I’ve dug up this that conveys the message.
- The GDP Deflator (a broad measure ion inflation) which is the broadest measure of costs in a rustic, has contracted for 2 consecutive quarters, and now stands at -1.4%
- When adjusted for deflation, China’s actual rates of interest are pushed larger
- “If deflation continues to eat into these, companies will cut wage growth, creating a vicious ‘loop’ of even weaker aggregate demand and deflationary pressures,”
And goes on to argue that authorities in China want a way more forecefula ppraoch tos stimulus.
Extra on the hyperlink above.
Final weekend:
- Weekend news: China CPI -0.5% y/y vs -0.1% expected
- Deflation pressures in China showed up starkly in the inflation data over the weekend
This text was written by Eamonn Sheridan at www.forexlive.com.
