ANZ BANK TIPS RATE CUT IN CHINA TO STIMULATE GROWTH

BEIJING – With China’s activity data in May indicating that growth has slowed further, ANZ Bank has revised its forecast for China’s GDP growth downwards - to 7.6% this year and 7.8% next year, from previous forecasts of 7.8% and 8.0%, respectively. “For this year specifically we think GDP will rebound somewhat to 7.9% in Q2 due to base effects, but moderate to 7.6% and 7.2% in Q3 and Q4 respectively,” ANZ says. “Meanwhile, tepid inflation in May also reflects a weak domestic demand. China’s CPI inflation was only 2.1% y/y in May, much lower than expected. For the whole year, we forecast CPI inflation could be at around 2.5%, which is 1ppt lower than this year’s 3.5% target.”