The Fed’s easing cycle — and the more favorable external environment that it provides — creates an opportunity to address deflation and revive domestic market confidence.
Jerome Powell, Chair of the Federal Reserve of the United States, answers reporters' questions at a Federal Open Market Committee press conference, July 31, 2024. Credit: Federal Reserve via Flickr
Last month, the U.S. Federal Reserve initiated its first monetary-easing cycle in more than four years. With a 50-basis-point cut, the Fed brought the federal funds rate down from its 20-year high of 5.3% to a range of 4.75-5%. This is good news for China, which now has much more room to maneuver in its quest to reflate its economy.
Prior to last month’s rate cut, monetary policy in the United States and China were on sharply diverging paths. The Fed had raised
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