According to some key Chinese advisors and economists, the People’s Bank of China (PBOC) should not be in a hurry to cut the interest rates, even though other major economies are moving closer to a rate-cut cycle to tackle economic headwinds.
Key Highlights:
“A passive rate cut may result in higher prices, if the Chinese central bank makes the same decision after the US Federal Reserve lowers its policy rates. And the effects on stabilizing China’s economy could be limited.
They agreed that 6 percent GDP growth is the lowest rate that policymakers could tolerate in the second half. To achieve the annual target of 6 to 6.5 percent, the government needs to rely on more fiscal spending, instead of monetary easing.
For China, many economists suggested not following the US by lowering interest rates, although the Fed’s cut may lead to a relatively stronger renminbi and reduce China’s exports.”
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