Indicators send confusing growth signals

Editor's Note: Figures released last week on China's foreign trade, inflation and new credit offered a mixed message about the economy. On the positive side was robust trade data and steady growth of new credit. On the negative side, the lowest CPI figure in nearly five years and continued deflation in the industrial sector underscored tepid demand. These statistics increased the difficulty of giving appropriate prescriptions, especially about whether the government should do more to shore up growth. Several leading analysts and economists give their assessments here.

Goldman Sachs Group Inc, Global Macro Research

Falling consumer-and producer-price inflation will push up real interest rates, if the nominal interest rate does not fall. This is a key reason why the open market operations rate and interbank interest rate have been falling in recent weeks. We expect policy rates to stay low until the end of the year. The likelihood of other policy loosening, such as interest rate and reserve requirement ratio cuts, has risen. But if these moves do occur, they are likely to come in targeted form as opposed to across-the-board cuts.