PBOC Holds Rates Steady Amid Economic Slowdown, Defying Fed’s Easing Move

The People's Bank of China maintained its seven-day reverse repo rate at 1.40%, injecting 487 billion yuan ($68.56 billion) into the banking system. This decision defies both the Federal Reserve's recent rate cut and growing signs of domestic economic deceleration.

Chinese policymakers appear to be betting on resilient exports and a surging stock market rather than immediate stimulus. The Shanghai Composite Index now trades NEAR decade highs, raising concerns about potential overheating even as export performance exceeds expectations.

Goldman Sachs' chief China economist Hui Shan notes the slowdown appears less severe than projected, with August activity data suggesting some planned stimulus measures may be deferred until 2026. The central bank's restraint reflects confidence in existing economic buffers despite global monetary divergence.