Global banks scale back China rate-cut calls, see policy rate on hold this year

Major global investment banks now expect China to keep official interest rates steady this year, scaling back earlier calls for rate cuts. The banks judge the spillovers from the Middle East conflict to be limited, while Beijing continues to signal a generally loose policy stance. Expect muted near-term rate-driven volatility in Chinese rates and FX, with implications concentrated in EM assets rather than global market stress.

Analysis

Major global investment banks now expect China to keep official interest rates steady this year, scaling back earlier calls for rate cuts. The banks judge the spillovers from the Middle East conflict to be limited, while Beijing continues to signal a generally loose policy stance. Expect muted near-term rate-driven volatility in Chinese rates and FX, with implications concentrated in EM assets rather than global market stress.