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China Leaves Rates Steady After Fed as Two Economies Diverge

Sep 27 , 2018

China’s central bank left short-term rates unchanged on Thursday, choosing not to follow a benchmark interest rate rise by the U.S. Federal Reserve despite the risk that it could that it could put renewed pressure on the yuan.

The move by the People’s Bank of China (PBOC) means that it did not immediately adjust borrowing costs for interbank loans after the U.S. Federal Reserve raised its key rate overnight.

While the PBOC had been expected to stand pat and has not always followed the Fed in lockstep, the decision highlights diverging policy paths for the world’s largest economies, with China’s economy slowly losing momentum and facing more pressure from escalating U.S. trade tariffs.

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