China Inflation Rate Headed for 0% on Cooling Food Prices

(Bloomberg) -- China’s inflation is set to drift down in the months ahead as food prices cool and slack household demand saps strength from prices of goods and services. Bloomberg Economics thinks the CPI will register around 0% year on year by end-2020. Slowing inflation would create more room for the People’s Bank of China to cut interest rates and while incremental easing is possible, BE thinks the PBOC will tread carefully to avoid credit-driven distortions in the economy.

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