China's Monetary Easing Amid Trade Tensions: The Art of Timing

China is advised to cautiously time its monetary easing moves amid rising trade tensions with the U.S. Although room exists for policy loosening, the focus is on choosing the right timing and strength to address uncertainties without risking financial stability. This cautious approach might not lead to immediate interest rate cuts.

SHANGHAI, March 15 - China's strategy of timing and force in monetary policy adjustments is under scrutiny, as indicated by state media on Saturday, suggesting that imminent easing is unlikely despite pressures from rising U.S. trade tensions.

The central bank's intention to adjust policy was announced just before a series of reports emphasized precision in tempo, potentially reducing expectations for immediate interest rate cuts or reserve requirement ratio reductions.

While policy space remains, China's central bank must navigate these waters carefully, balancing economic support while mitigating risks, dampened by international yield differentials and domestic interest margins. Recent monetary strategies highlighted a preference for structural tools over straightforward rate cuts, indicating restrained easing measures for 2024.

(With inputs from agencies.)