Monetary Policy Report - 1st Quarter 2018

The current economic background

In their first term in office the PBC’s new governor Yi Gang and new party secretary Guo Shuqing, who have been appointed at the 13th National People’s Congress this March, are facing interesting times to say the least.

With the “new normal” it is still hard to assess the location of the Chinese economy in the business cycle. Growth is  substantially lower than it has been in the pre-crisis period (and immediately after), and at this point it is hard to judge, how much of this can be attributed to the business cycle and how much to the inevitable slowdown of growth with China approaching the natural end of its miraculous catching up process. In consequence, monetary policy faces almost  unprecedented uncertainty.


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