PBOC Adviser: Chinese economy could see a risk of ‘quasi-stagflation’

FX

Liu Shijin, an advisor to the People’s Bank of China (PBOC) warned on Monday, the Chinese economy could enter a period of ‘quasi-stagflation’.

Key quotes

“China’s economy could enter a period of “quasi-stagflation” with relatively slow growth and excessively high producer-price inflation.”

“Such a scenario is “very likely” if demand remains weak, producer prices stay high, corporate profits are squeezed, and existing risks in the economy are “released too quickly.”

“The possibility needs close attention – if it happens it will last into 2022.”

Meanwhile, Reuters reports that “a between-the-lines reading of the PBOC’s latest quarterly monetary policy report suggests China’s central bank is ostensibly leaning toward easing.”

Market reaction

USD/CNY is trading modestly flat at 6.3831, as investors digest the latest PBOC no-rate change decision and the latest weaker yuan midpoint.

Articles You May Like

Dollar to Pause for Consolidation After Failing to Break Euro Resistance Post-Fed
Santa Claus stuffs stock market portfolios in a holiday-shortened session
House speaker Johnson: We have a unified agreement among Republicans
Lots of balls in the air moving markets with the US government getting in the act today.
Pound Sterling gains as investors shrug off increased BoE dovish bets

Leave a Reply

Your email address will not be published. Required fields are marked *