Ex-PBOC Adviser Li: China has scope to cut rates by up to 50 bps

Dhwani Mehta FXStreet

Li Daokui a former member of the People’s Bank of China’s (PBOC) monetary policy committee, said on Tuesday that China’s central bank has room to cut its benchmark interest rate by 50 basis points (bps) over the next year if the economy remains in doldrums, per Bloomberg.

Key quotes

“People’s Bank of China can lower rates through the middle of 2023 as needed to alleviate corporate debt.”

“Further cuts would be made possible because of the country’s strong trade surplus and capital controls that will support the yuan and ease capital outflow pressure.”

“I think there’s still room for 30-to-50 basis points of interest rate cuts in total by the end of the first half of next year.”

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