What Powell’s rate cut signal means for PBoC

U.S. Federal Reserve Board Chairman Jerome Powell arrives to testify at a Senate Banking and Hosing and Urban Affairs Committee hearing on "The Semiannual Monetary Policy Report to Congress" on Capitol Hill in Washington, U.S., February 26, 2019. - Reuters

BEIJING: The unmistakable signal from US Federal Reserve chairman Jerome Powell that a rate cut is imminent hands China more room to manoeuvre in easing its own monetary policy. The question is on which tool to use.

With a slowing economy, resurgent deflationary fears and the downdraft from trade tensions, the case for easier policy from the People’s Bank of China (PBoC) is building. A more stable yuan also gives Governor Yi Gang and other policy makers more leeway.