China Engages in 'Backdoor QE' as Monetary Policy Shifts, Says Jefferies
A pedestrian walks past the People's Bank of China (PBOC) headquarters in Beijing, China, on Monday, Jan. 18, 2016. China's economy slowed in December, capping the weakest quarter of growth since the 2009 global recession, as the Communist leadership struggles to manage a transition to consumer-led expansion.
Blink and you might have missed it: The People's Bank of China's (PBOC) expansion of its lending facilities — aimed at injecting banking-sector liquidity and lowering borrowing costs for companies — is shoring up bank-demand for government bonds, a development analysts at Jefferies Group LLC have dubbed a form of backdoor quantitative easing (QE).
Chinese authorities have embarked on a bumper monetary-easing program that boosts Beijing's fiscal firepower to both juice the economy and redress bad debts that are clogging the financial system and depressing private-sector investment.