However, market observers believe that the People's Bank of China (PBOC) is more likely to cut key short-term money market interest rates in order to follow the pace of interest rate cuts in the United States.
This is not the first time that the Central Bank of China has followed the pace of the Federal Reserve. In 2017 and 2018, the People's Bank of China raised short-term interest rates a few hours after the U.S. interest rate hike, albeit by a small margin, only by a symbolic increase of 5-10 basis points.
While Chinese officials continue to play down the possibility of more radical easing, China's economy has been slow to respond to the previous series of stimulus measures. On the other hand, the longer the U.S. -China trade war drags on, the higher the cost.
Some analysts believe that China's gross domestic product (GDP) growth is close to the low end of the government's target range of 6-6.5% in 2019, which makes it increasingly anticipated that more support measures will be needed soon.
In order to stimulate lending, the Central Bank of China has injected a large amount of liquidity into the financial system in various forms in the past year, especially directed support to small and medium-sized enterprises and private enterprises. The central bank also quietly guided some short-term interest rate cuts to ease the pressure of corporate financing.
But analysts say the stimulus to investment is not as good as expected, because uncertain business prospects lead companies to be reluctant to make new investments, which are urgently needed to stabilize the economy. Analysts said that the overall system of interest rate cuts may bring more direct relief to troubled enterprises.
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