国内英语资讯: Economic Watch: China stands firm on monetary policy after Fed rate hike_时事

国内英语资讯: Economic Watch: China stands firm on monetary policy after Fed rate hike

BEIJING, March 16 (Xinhua) -- The latest Federal Reserve interest rate hike may complicate matters for China's central bank but will not affect its monetary policy, which will remain prudent and neutral.

With the job market strengthening and inflation approaching its target, the Fed raised interest rates overnight by 25 basis points to a range of 0.75 percent -- 1.0 percent, only the third increase since the 2008 global financial crisis,.

Two more adjustments are expected this year, making life difficult for the People's Bank of China (PBOC) as it strives to keep the yuan stable and maintain the pace of economic recovery -- no easy task while constantly working to defuse financial risks.

Tom Orlik, chief Asia Economist at Bloomberg, believes the Fed has put the PBOC in a tricky position. He makes the point that the bank could easily have followed the Fed's lead and raised its own benchmark rates, supporting the yuan and reducing capital outflow, but at the risk of stymieing economic recovery. Standing too firm, on the other hand, would bring the twin risks of a depreciating yuan and renewed capital flight. Instead, the PBOC chose a solution that "makes a lot of sense," leaving benchmark rates on hold and making use of targeted instruments.

Interest rates for both medium-term lending facility loans and reverse repos, the central bank's tools of choice for open market operations, rose 10 basis points. These higher rates reflect changes in the market without constituting a benchmark interest rate hike and do not signal any shift in monetary policy.