The media learned about the plans of China to find out the timing of fed rate hike


Chinese officials expect to find out from our American colleagues the prospects of interest rate hikes, the fed at its upcoming meeting in June, Bloomberg reported informed sources on condition of anonymity. To ask such questions Chinese negotiators want during the annual U.S.-China Strategic and Economic dialogue on June 6-7 in Beijing.

According to interlocutors of Agency, the Chinese delegation will try to figure out when in June or July — the fed most likely to raise. The Chinese government is preparing for the potential impact of this decision on financial markets and on the yuan: if the Federal reserve will tighten monetary policy, then China is preferable that to happen later in July. China fears that the fed’s rate hike will push the dollar, says Bloomberg chief economist for Asia at Mizuho Securities Asia Shen Sanguan, it may make it difficult to maintain a stable exchange rate of the yuan.

The Chinese will probably be the opportunity to ask about the timing of a rate hike from the fed chief, Janet Yellen, who participated in both the previous strategic dialogues with 2014, when she became head of the fed. The U.S. Embassy in China, Bloomberg did not answer the question whether coming to the talks in Beijing, the fed officials at this time.

May 18, the fed published the minutes of the meeting of 28 April in which he said that does not rule out a rate hike in June, if you consider the economic indicators are quite positive. The fed defers the decision to raise rates for the third time in a row since raising it in December last year — the first in nine years. As explained by the Central Bank in his statement, he still believes the U.S. economy is stable, and the problem is rather in the indicators of the global economy. However, the fed is now less concerned about the state of the global economy, according to the minutes from the April meeting. This statement had a strong impact on traders and investors. As wrote the Wall Street Journal, after the publication of the traders increased the estimated probability of a rate hike in June to 34%, whereas before the fed statement, it was only 4% (according to futures on rate FRS), and the probability of a rate hike in July has increased from 20% to 56%.

Beijing is trying to do everything possible to delay the process of raising rates, as this can cause an increase in the outflow of capital from emerging markets. On the fed statement the people’s Bank of China responded immediately to the devaluation of the yuan, setting a fixed rate of 6,5531 yuan per dollar by 0.48% below the previous year (6,5216).

Then the dollar rose against the yuan to its highest level since early February — just below the January highs. May 19, shares of China showed a weak dynamics and trading volume for Chinese stock markets close to a minimum of three and a half months as investors refrained from taking action because of concerns over rate hike in June and the impact of this on the economy of the PRC. The index of Shanghai stock exchange Shanghai Composite fell by 0.01% to 2.806,91 points, the index of blue-chip CSI300 0.2% to 3.062,5 points. The Hong Kong stock market has closed at least two and a half months: index Hong Kong stock exchange Hang Seng dipped 0.7%, to 19.694,33 points — a minimum at the close of 1 March, the China Enterprises index by 0.7%, up to 8.243,2 points.

In early 2016 the devaluation of the yuan, which the Chinese indices slipped more than 5%, caused chaos in world markets, including American. “The Chinese side will insist that the United States should be cautious with tightening of monetary policy and to avoid any surprises,” said the chief economist, Asia of the British Capital Economics mark Williams. According to him, cited by Bloomberg, “the fed will make the decision purely on the basis of what she thinks is best for the American economy, but it is obvious that concern about the situation in China influenced her vision of the balance of risks facing the United States.”

May 25, the Chinese Central Bank has lowered the fixed rate of the yuan to 6,5693 yuan per dollar — this is the minimum level since March 2011.