Shanghai, China, (Reuters) – He told the China Securities Journal on Monday that Beijing’s desire to ease monetary policy would not be affected by the narrowing of China-US rate differences.
This comes as many expect the US Federal Reserve to raise interest rates later this week, while others expect the People’s Bank of China (PBOC) to lower interest rates on medium-term loans on Tuesday. Yu is an important economist at the Chinese Academy of Social Sciences.
When Yu, an ex-member of China’s monetary policy committee, said that even if US interest rates rose to 2%, the US real interest rates would stay negative because of excessive inflation, unlike the positive interest rates in China, Yu’s comments were widely reported.
Because China has policy tools to stop extreme outflows of money, Yu says the yuan could be more flexible to lessen the impact of cross-border capital movements on its ability to set its own monetary policy.
There are many problems in China, but the country wants to grow by 5.5% this year, even though there are many problems in the country’s economy. These problems include the reemergence of Coronavirus at home and slowing real estate prices, as well as rising geopolitical tensions.
