Don’t Fight the Fed. But Is China Worth a Shot?
The PBOC fancies itself as playing a long game.
Source: Bloomberg
The idea of taking out insurance against worst-case scenarios, mostly by cutting interest rates, became a popular choice among the world’s big central banks over the past quarter century. Beijing has shunned this doctrine lately. It may come with a price.
The People's Bank of China recently downplayed concerns that the world’s second-largest economy is in trouble. The PBOC’s latest quarterly statement emphasized long-term prospects and discouraged investors from focusing on what it sees as merely short-term hurdles. Translation: Rein in those bets on rate cuts. Goldman Sachs Group Inc. was among those that got the message, pushing back its forecast for the next reduction to the first quarter of 2026. Other large institutions, including Citigroup Inc., had already thrown in the towel.