China Tilts Monetary Policy Ever So Slightly

China’s economic policymakers have shifted their stance to a certain extent. The central bank’s cut in the capital reserves it requires of banks, though tiny, trimming half a percentage point off the record 21.5% for big banks, goes beyond “fine tuning”. It shows slowing growth is now a greater policy concern than inflation, which, though remaining stubbornly high, policymakers take as having peaked. The move is cautious, and follows a similar cut for small regional banks last week, but policymakers are signaling they stand ready to loosen further if circumstances warrant.

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