Tightening Off The Agenda As Slowdown Awaits

China's solid Q210 real GDP growth figure of 10.3% y-o-y does nothing to change our view of a sharp slowdown in H210. However, the benign inflation readings, coupled with our bearish growth outlook, suggest to us that interest rate hikes are no longer likely this year. Indeed, the cooling effect of reduced money supply growth will likely be contractionary enough.

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