China: Deflation risk subsides - ANZ

Raymond Yeung, analyst at ANZ, points out that China’s inflation data for March indicate that the supply shocks faced on the consumer and producer fronts have helped to mitigate deflationary risks.

Key Quotes

“The broad-based rebound in producer prices in March also implies an improvement investment demand.”

“Although a decreased risk of deflation will reduce the urgency faced by China’s central bank to cut interest rates, any RRR cut will still be driven by market liquidity conditions.”