China unlikely to follow US Federal Reserve interest rate cut, central bank governor suggests
- People’s Bank of China chief Yi Gang tells Chinese magazine ‘Caixin’ that Beijing does not always follow rate changes made by its American counterpart
- The US Federal Reserve is widely expected to announce a 0.25 percentage point cut next week
China’s interest rates are at an “appropriate” level, according to central bank governor Yi Gang, a strong suggestion that Beijing is unlikely to follow the US Federal Reserve in making an expected rate cut later this month.
Yi pointed to the fact that China did not follow the US Federal Reserve in raising interest rates last year, and that the People’s Bank of China (PBOC) will look at its own domestic situation regardless of any moves made by the United States in cutting benchmark rates.
“Our current interest rate levels are appropriate. A cut in interest rates is mainly intended to address deflation risks, but China is seeing a modest inflation,” Yi told Chinese magazine Caixin.
The current levels of Chinese interest rates are close to “a golden level, or a comfortable level”, he added, with China having not changed its benchmark loan and deposit rates since October 2015.
Our current interest rate levels are appropriate. A cut in interest rates is mainly intended to address deflation risks, but China is seeing a modest inflation
The US Federal Reserve is widely expected to announce a 0.25 percentage point interest rate cut next week.
