China's CPI inflation likely to slip further

China's March CPI inflation number is likely to slip further with consensus looking for a fall from 1.4%y/y to 1.2%y/y,further from the Government's 2015 target of "around 3%".

"We view the 7% GDP growth target and 3% CPI inflation targets as ambitious and to achieve them, further monetary easing will be required" , says RBC Capital Markets

All tools are on the table - this includes further RRR cut/s (consensus expects another 50bps by year end), benchmark lending cuts (consensus expects ~15bps by year end) and potential widening of the USD/CNY daily trading band, which would also represent another step toward exchange rate liberalisation.