Odds rise for first China rate cut in years

China’s stubbornly weak credit growth has spurred talk of its first cut in benchmark lending rates in three years, but economists and policy insiders say concerns about a potential knock to its currency will likely give the central bank pause.

While the People’s Bank of China (PBOC) has already slashed banks’ reserve requirements four times this year and pushed money market rates lower, analysts are now wondering if policymakers are considering wheeling out bigger guns.

China’s economic growth has cooled to its weakest pace since the global financial crisis and is expected to soften further in coming months if domestic demand is slow to recover and the United States piles more tariffs on Chinese goods.

Beijing has announced a raft of growth-boosting measures in recent months to cushion the fall — ranging from more construction spending to tax cuts — and more are likely on the way.

But analysts say it will take some time before the world’s second-largest economy starts to stabilise. Data last week showed credit growth slowed sharply in China in October, despite increased injections of liquidity by the central bank into the financial system.