---
title: "China still has room to ease as inflation remains below target, BofA says"
type: "News"
locale: "en"
url: "https://longbridge.com/en/news/282477086.md"
description: "Bank of America indicates that China has room to ease monetary policy further despite a slight increase in inflation forecasts. The bank projects consumer price inflation (CPI) at 1.0% and producer price inflation (PPI) at 1.2% for 2026. The inflation rise is attributed to external factors rather than domestic demand recovery. Weak consumption and ongoing challenges in the property sector suggest that the People's Bank of China can cut interest rates further to stabilize growth, maintaining an accommodative policy stance unless domestic demand improves significantly."
datetime: "2026-04-13T02:45:50.000Z"
locales:
  - [zh-CN](https://longbridge.com/zh-CN/news/282477086.md)
  - [en](https://longbridge.com/en/news/282477086.md)
  - [zh-HK](https://longbridge.com/zh-HK/news/282477086.md)
---

# China still has room to ease as inflation remains below target, BofA says

China’s inflation outlook has been nudged higher, but externally driven price pressures and weak domestic demand mean policymakers still have room to ease further.

Summary:

-   BofA lifts China inflation forecasts but sees pressures externally driven
-   CPI seen at 1.0%, PPI at 1.2% for 2026
-   Inflation remains below PBoC comfort levels
-   Weak domestic demand keeps easing bias intact
-   Policy space remains open for further rate cuts

China’s policymakers are expected to retain flexibility to ease monetary policy further, despite a modest upgrade to the country’s inflation outlook (China’s March inflation data confirms a key turning point), according to Bank of America. The bank has revised its 2026 forecasts higher, now seeing consumer price inflation (CPI) at 1.0% and producer price inflation (PPI) at 1.2%.

However, the upward revision does not signal a meaningful shift in underlying economic momentum. BofA emphasises that the recent firming in prices is largely being driven by external factors, particularly higher global energy and commodity costs, rather than a sustained recovery in domestic demand. This distinction is critical for policymakers assessing the appropriate stance of monetary policy.

Inflation remains well below levels that would typically constrain the People’s Bank of China (PBoC). As a result, authorities are unlikely to view the modest uptick in price pressures as a barrier to further easing, especially if economic activity fails to gain traction. Weak consumption, ongoing property sector challenges, and subdued private sector confidence continue to weigh on the domestic growth outlook.

Against this backdrop, BofA argues that the PBoC retains scope to cut interest rates further or deploy additional supportive measures if needed. The central bank’s priority remains stabilising growth rather than containing inflation, given the absence of demand-driven price pressures.

The outlook reinforces the view that China’s macro environment remains characterised by low inflation and policy support, even as global factors introduce some upward pressure on prices. For markets, this suggests that easing bias remains firmly in place, with policy likely to stay accommodative unless there is a more convincing improvement in domestic demand conditions.

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