There’s increasing evidence the People’s Bank of China’s year-and-a-half-long easing cycle is hitting the mark. Bloomberg cites its own 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. Additionally, the PBOC’s new market-focused policy setting has kept the seven-day repo rate confined to a narrow range since August. That suggests banks have access to funds if they want to lend. Also, deflation risks are waning, housing prices are rising and the RMB has stabilized.
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