There’s increasing evidence the People’s Bank of China’s year-and-a-half-long easing cycle is hitting the mark.
Exhibit one is Bloomberg’s Monetary Conditions index, which looks at changes in interest and exchange rates to give a sense of the overall tightness of policy. It shows the loosest conditions since late 2011.
Exhibit two: the PBOC’s new market-focused policy setting has kept the seven-day repo rate — a gauge of money market liquidity — confined to a narrow range since August. That suggests banks have access to funds if they want to lend.