BOFIT Viikkokatsaus / BOFIT Weekly Review 2018/39

At a time when China is applying economy stimulus through monetary easing, the United States continues to tighten its monetary stance. The US Federal Reserve raised rates yet again on Wednesday (Sept. 26). Thus, the interest rate spread between China and the US has practically vanished.

While China continues to apply stimulus measures on worries over slowing growth, monetary easing fuels China’s debt problems and adds to capital flight and yuan’s depreciation pressures.

3-month rates of various Chinese bonds and US treasuries

Source: Macrobond.

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