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China leaves rates steady after Fed as two economies diverge

China Materials 27 September 2018 10:34 (UTC +04:00)

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, Reuters reports.

The move by the People’s Bank of China (PBOC) means that it did not immediately adjust borrowing costs for interbank loans after the Fed 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.

China’s economy is slowly losing momentum and is facing more pressure from escalating U.S. trade tariffs.

The Fed, on the other hand, sees the U.S. economy growing at faster-than-expected pace this year, with only a slight slowdown in 2019.

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