The Magazine for Asian Investors
The People’s Bank of China (PBOC) left its key interest rate unchanged today. This reflects that the PBOC has chosen a more differentiated monetary policy than the Federal Reserve (Fed), which could put pressure on the yuan.
The PBOC left the one-year medium-term loan (MLF) rate, China’s benchmark interest rate, unchanged at 2.85%.
The PBOC’s decision to leave interest rates unchanged comes ahead of today’s announcement of the Fed’s monetary policy committee (FOMC) decision. While most analysts predict that the Fed will raise interest rates up to 0.75%, which would be the largest rate hike since 1994.
China has tried to avoid aggressive monetary tightening in recent months due to insufficient liquidity in the system. At the same time, China has resorted to targeted lending tools and accelerated fiscal spending to spur economic recovery. The economy has been severely slowed by the effects of the Covid 19 pandemic and the collapse of the real estate market.