The China-US yield spread has reached a historical high, and as the US CPI continues to cool, the hope for a rate cut has clearly increased. Powell's speech mentioned that risks are not only about inflation but also include other factors.
Under the circumstances of the declining U.S. interest rates, China has the room to follow suit and reduce its own rates, thereby narrowing the current excessive bilateral interest rate spread.
Otherwise, the pressure from the interest rate differential will continue to exert downward pressure on the renminbi, which could hinder the international pricing power of domestic financial assets…
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