20240719 PBOC and Shanghai

China's central bank faces an "impossible trinity": simultaneously controlling interest rates, keeping the exchange rate stable and keeping the economy open. (Source photos: Kosaku Mimura; Reuters)

China's central bank battles perceptions that deflation is taking hold

Markets skeptical central bank can maintain effort to push up rates

HONG KONG -- China's economy faces growing deflationary pressure, and its central bank is trying to keep pessimism at bay by pushing up interest rates.

This month, the People's Bank of China (PBOC) took a number of steps aimed at halting the slide in government bond yields, which hint at a further slowdown in the economy. The steps range from rare, direct market interventions to sending warnings through a government-controlled news outlet. 

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