China might further cut rates to stabilize the economy, as shrinking China-U.S. yield spreads won’t change Beijing’s monetary policy loosening bias, the China Securities Journal reported on Monday, citing former central bank adviser Yu Yongding.
Yu is an influential economist at the Chinese Academy of Social Sciences put forward this comment ahead of anticipate Federal Reserves of U.S. to hike rates later this week amid high inflation. He noted, some experts expected China would cut down rates further.
Yu further said, China has tools to prevent severe capital outflows, while the yuan’s flexibility can improve further to offset the impact on monetary policy independence from cross-border capital flows.
China currently faces high economic headwinds with resurgent of COVID-19 case has put Shenzen under lockdown along with geopolitical tensions leading to soaring commodity prices and constrained supply chain.