MNI China Daily Summary: Thursday, July 25

MNI BRIEF: Japan Govt Keeps Econ View, Cuts Exports

MNI: PBOC Conducts CNY200 Bln via MLF Thurs; Rate Cut

MNI: PBOC Sets Yuan Parity Lower At 7.1321 Thurs; -1.92% Y/Y

CHINA PBOC CONDUCTS CNY235.1 BILLION VIA 7-DAY REVERSE REPOS THURS

CHINA SETS YUAN CENTRAL PARITY AT 7.1321 THURS VS 7.1358

CBI Price Expectations for Three Months Ahead Lowest Since December 2020

MNI: UK JUL CBI INDUSTRIAL TRENDS TOTAL ORDERS -32

Broad-Based IFO Weakness Reinforces Narrative of Recovery Stall

RPT-MNI: Canada Sticks To Fiscal Anchors, Spends Chunk Of Windfall

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Pill: Always Seeking A Balance On Policy

BOE
Q: The BOE is strikingly confident that financial difficulties are manageable and can be dealt with regulatory systems in place since the GFC. What is the MPC's preference between overshoot and undershoot in the economy? Given the credibility of central banks is a powerful instrument to keep inflation under control, CBs have to have a bias towards overkill - can't risk not hitting inflation on the head.
  • A: Don't want to sound complacent re financial system - confident enough we are treating issues in the financial system the way we always would. Don't feel need to change MPC's views based on the Financial Policy Committee's comments.
  • There are issues around preferences - we are symmetric and have a symmetric inflation target. That's how I approach this problem. If our preferences are symmetric but the economy is asymmetric (seen in recent years with lower bound being hit too), actions don't need to be symmetric.
  • When I think about policy, always seeking a balance. Look forward to when actions will take effect (12-24 month window). Want to be steering distribution to be around target at all horizons.
  • If there are challenges to credibility through having higher inflation, then reason to have a cost to output to bring inflation down. That also works in the other direction (e.g. through keeping rates low when inflation was low). Do have to recognise there is scope to do too much than too little.
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