Fitch delays China rate cut in response to Fed’s decision to keep interest rates unchanged

Many investors have been keeping a close eye on China’s monetary policy decisions, particularly in light of the U.S. Federal Reserve’s recent stance on interest rates. Fitch Ratings, a renowned ratings agency, has adjusted its forecast for China’s policy rate, now predicting that there will be no cuts this year. Instead, Fitch anticipates a reduction to 2.25% next year, citing the Fed’s high interest rates as a contributing factor.

At Extreme Investor Network, we understand the importance of staying informed about global economic trends and how they may impact investment opportunities. The recent shift in Fitch’s forecast highlights the interconnectedness of global economies and the ripple effects that monetary policy decisions can have.

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According to Jeremy Zook, Fitch Ratings’ head of sovereign rating in Asia Pacific, external factors such as currency exchange rates and the Fed’s monetary policy decisions play a significant role in shaping China’s monetary policy outlook. As the Fed signals a potential cut in policy rates, Zook believes that China may have more room to maneuver next year.

Additionally, concerns about bank net interest margins and the pressure of capital outflows due to a weaker Chinese currency are also influencing China’s policy decisions. The last time China cut the one-year MLF was in August 2023, underscoring the cautious approach that the People’s Bank of China (PBOC) has been taking.

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PBOC Governor Pan Gongsheng has reiterated that China’s monetary policy will remain supportive and highlighted the relative interest rate gap between China and the U.S. as a key consideration. As major developed economies delay shifts in their monetary policy, the global economic landscape continues to evolve, presenting both challenges and opportunities for investors.

Stay tuned to Extreme Investor Network for more insights on global financial trends and how they may impact your investment strategies. Our team of experts is dedicated to providing valuable analysis and actionable recommendations to help you navigate the ever-changing world of finance.

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