Evanson Asset Management’s Hong Kong based Director of Research, Mr. Jonathan Hewitt expects the primary lending rate in China to fall a further 0.25 percentage points during the third quarter of 2015.

“As China continues with a slowing economy I believe it makes economic sense for policy makers to continue the trend in the reduction of commercial interest rates. We saw last week the third interest-rate cut in only the last six months. This came as a result of less than positive import export data, which clearly demonstrates the uphill task in the setting of a 2015 growth target of 7 percent,” commented Mr. Hewitt.

As Evanson’s Director of Research and Chief Economist, Mr. Hewitt continued with further analysis that underlines his believe that a further rate cut is imminent.

“Consumer confidence has been on a steady decline, which is strongly reflected by a fall in producer prices; a trend that is now into it’s 38th consecutive month. To help cushion this fall down the government will have to step in and ease its lending policy. The position does not call upon panic as they still have plenty of room boost consumer spending over the medium-term.”

Mr. Hewitt continued to share his opinions on the development of deposit rate policy, which would likely follow a cut to align with the 0.25 interest cut percentage point to 2 percent on deposit.

“So far what we have seen in 2015 is that the Central Bank has pursued a multi-pronged approach to economic easing through the combination of cuts on the rate of lending and on the rate of deposits, essentially leading to lower bank reserve ratios in an attempt to suppress money-market rates.”

Headquartered in Hong Kong, Evanson Asset Management is ideally positioned to capitalize on the economic improvements of Mainland China and therefore maintains a research network providing contemporary research on economic developments.