China to keep monetary easing at moderate level: expert

HONG KONG, Asia in Focus (LBO) – China’s monetary easing will stay at a ‘moderate’ level, an expert said Friday, cautioning investors not to become too optimistic about the Chinese economy. The central People’s Bank of China (PBOC) surprised markets late Wednesday by announcing a 50 basis points cut in required reserve ratios, effective from Monday, a move considered by many as the official start of China’s monetary easing.

“The market responds very positively to the ratio cut in China, hoping that this means the beginning of a very strong relaxation cycle,” said Vincent Chan, research analyst at Credit Suisse.

“We would like to caution investors that there are much stronger constraints on the Chinese government’s relaxation policy than in 2008, and they could be disappointed by hoping for too much.”