China could cut interest rates if economic data disappoints: government researchers

A woman walks past the headquarters of the People's Bank of China (PBOC), the central bank, in Beijing, June 21, 2013. REUTERS/Jason Lee/File Photo

BEIJING (Reuters) - An interest rate cut cannot be ruled out if China’s second-quarter economic data misses expectations, researchers from a government-affiliated institute wrote in an official newspaper on Friday.

However, the reserve requirement ratio for banks is likely to remain stable due to sufficient liquidity, researchers at the National Development and Reform Commission, the country’s top economic planner, wrote in the Shanghai Securities News.

The commentary also said the yuan may return to stability and even appreciate after a period of depreciation following external volatility. The currency recently fell to 5-1/2 year lows.

China will release June and second-quarter gross domestic product (GDP) data next week.

Many analysts believe China’s economic growth likely edged lower in the second quarter from the first quarter, while most June indicators were expected to point to a slight loss of momentum from May.

Reporting by Elias Glenn and Beijing Monitoring Desk; Editing by Kim Coghill