PBOC’s poker face keeps nervous markets guessing

At some point, investors might conclude that Chinese authorities are simply toying with global markets.

On Monday (August 21), People’s Bank of China Governor Pan Gongsheng knew full well that punters everywhere were braced for major easing. A bold step seemed warranted as the property slump deepens, consumer spending craters, credit growth tumbles and deflation takes hold.

Yet Pan surprised markets with more restraint. Though the PBOC trimmed its one-year lending rate, it left the more consequential five-year rate unchanged.

Such disappointments — and a widening gulf between market expectations and Beijing’s actions — are becoming a common theme. It speaks to a balancing act that President Xi Jinping seems determined to pull off.