Economics
China Pivots on Central Bank Easing as Fed Heads for Taper
- Bond yields drop in China as more support seen for economy
- State Council’s shift suggests subdued second-quarter activity
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China made a surprise shift Wednesday by signaling the economy needs additional central bank support, a warning for the rest of the world about how circuitous the exit route from the Covid-19 pandemic is proving to be.
The State Council, China’s equivalent of a cabinet, hinted the People’s Bank of China could make more liquidity available to banks to boost lending. It’s a move that puts the PBOC at odds with the U.S. Federal Reserve’s discussions around tapering its bond-buying program, suggesting that monetary policy in the world’s two biggest economies could be headed in opposite directions again.