Jay Powell and Yi Gang Sound Pretty Similar These Days
Despite a widening diplomatic rift, monetary officials in the U.S. and China are using almost identical language.
Never the twain shall meet?
Photographer: Eugene Hoshiko/AP via Bloomberg
To listen to the People's Bank of China and the Federal Reserve, you wouldn't know that Beijing and Washington are engaged in Cold War-like tussle. Monetary officials in both places sound like they are using the same lines to describe pandemic-era economic challenges — be it spurts in inflation, or the proper amount of support for a deceptively robust recovery.
A lot hinges on the two superpower central banks getting the policy mix right and complementing, rather than countering, each other. After a few enviable quarters of growth, China's economy is heading back toward its pre-Covid pace of around 6% — or less. The Fed needs to withdraw from massive stimulus very gently or risk global market convulsions. Neither is likely to undertake a sharp course correction: The Fed's tightening will be gradual, as will any easing from the PBOC.