- The Federal Reserve and Bank of England both made 75-basis-point interest rate hikes this week.
- China, however, has kept relatively loose monetary policy, compared to Western economies.
Both the Federal Reserve and the Bank of England raised their key interest rates by 75 basis points this week, marking a continuation of an aggressive monetary policy campaign that Western nations have undertaken in a bid to tame inflation.
The People's Bank of China, however, has maintained comparatively accommodative policy even as downside pressure on the yuan grows. China's currency slipped 0.4% against the dollar to 7.3166 Thursday, nearing the 15-year low of 7.33 which it hit on Tuesday.
The governor of the People's Bank of China, however, said China's "normal" monetary policy would bolster the yuan on the world stage, while promoting income growth.
"The yuan exchange rate will continue to remain basically stable at a reasonable and balanced level, and the value and purchasing power of the yuan will remain stable," Yi Gang said Thursday, according to the South China Morning Post, adding that the yuan has appreciated against other major currencies despite slipping against the greenback this year.
Through 2022, Chinese equities and bonds have seen a wave of outflows, with yuan-denominated assets appearing less attractive due to China's weakening currency. The yuan has shed 15.7% against the dollar since March. The US Dollar Index, for its part, has climbed 17.6% year to date.
China's top banking regulator Guo Shuqing, who oversees China's $40 trillion banking and insurance industry, warned on aggressive rate hikes elsewhere.
"High inflation is becoming the biggest challenge to the global economy," Guo said, according to the South China Morning Post. "The central banks of major developed economies have aggressively tightened monetary policy, which is likely to trigger a widespread economic recession in Europe and the United States."