PBOC to remain timid despite renminbi turnaround

The recent batch of weaker-than-expected US data and resulting global market fallout hasn’t significantly altered China’s economic outlook. While US recession risks have risen somewhat, a soft landing remains likely. And for now, exchange rate moves are working in Chinese exporters’ favour. Those hoping that a weaker US dollar will open the door to large-scale PBOC rate cuts look set to be disappointed however, with efforts to put a floor beneath long-term bond yields likely to keep monetary easing modest.