China’s Monetary Easing Is Starting to Hit Home

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.


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Craig Erlam

Craig Erlam

Senior Currency Analyst at OANDA
Based in London, England, Craig Erlam joined OANDA in 2015 as a Market Analyst. With more than five years' experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while conducting macroeconomic commentary. He has been published by The Financial Times, Reuters, the Wall Street Journal and The Telegraph, and he also appears regularly as a guest commentator on networks including Sky News, Bloomberg, CNBC and BBC. Craig holds a full membership to the Society of Technical Analysts and he is recognized as a Certified Financial Technician by the International Federation of Technical Analysts.