China seen boosting stimulus measures as virus hammers economy

"RRR cuts, rate cuts, various lending facilities and open market operations all are possible options, ” the Nomura economists wrote. "However, it seems unlikely that these measures would turn the economy around, as the virus outbreak may further weaken domestic demand and thus render the upcoming policy easing less effective.”

SYDNEY: China is expected to unveil efforts to cushion the economic blow from coronavirus, with the central bank set to keep liquidity ample and the government likely to step up spending.

Authorities will need to break their fiscal rule of a 3% deficit relative to GDP to "slow the downward spiral of economic activities, ” according to Li-Gang Liu at Citigroup Inc. Measures such as cutting interest rates and the proportion of deposits banks must set aside as reserves are possible, said Larry Hu, head of China economics at Macquarie Securities Ltd. in Hong Kong.