PBOC and Fed policy loosening won’t hinge on tariffs

President Trump’s claim that the PBOC will loosen policy in the months ahead may prove accurate, but this will be a justified response to a weaker economy and not a direct retort to tariffs. And while the Fed is likely to deliver rate cuts in time, this won’t be due to the trade war or political pressure either. Instead, it will reflect a slowdown in US growth which we expect to be sharper than that in China this year.