Ex-PBOC Statistics Official: Rate cut would ease yuan pressure
Sheng Songcheng, a former Director of the People's Bank of China's (PBOC) statistics department, called for a moderate rate cut in the second half of 2021, in order to ward off any risks from a potential economic slowdown and US rate hikes.
Key quotes
“China's monetary policy should remain stable with a tilt to looser in the second half of the year, moderately cutting interest rates.”
“A reasonable and moderate interest rate cut would help reserve future policy room for future interest rate hikes when the Federal Reserve tightens its monetary policy.”
“As well, a moderate cut could ease flows of short-term speculative funds flowing into China that are pushing up the yuan.”
“It will also help stabilize China's exports in H2.”
“China may still achieve high growth of 8% in Q2 before slowing to 5-6% in H2.”
“An active monetary response to promote comprehensive economic recovery as fiscal expansion is weaker than last year.”
“Moderate inflationary pressure in the short-term, as well as relatively stable asset prices, provide the right conditions.”
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Author
Dhwani Mehta
FXStreet
Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.
