PBoC monetary policy reform could be 'trial and error', economists warn

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By removing the cap on deposit rates, the PBoC is allowing banks to bid up deposit rates in order to attract depositors at a time when returns on savings remain low

When the Chinese government surprisingly announced it would scrap its one-child policy after 30 years last week, western media unsurprisingly heralded it as a historical moment. The People's Bank of China's (PBoC) announcement six days earlier that it would scrap the ceiling on rates that banks are allowed to pay depositors, and move towards a corridor-based monetary policy regime, may have garnered less attention, but was also of major consequence.

Obscured by cuts to the "benchmark rates" and

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