BEIJING — China’s central bank is poised to move carefully toward easing monetary policy, even as the US. is on its way to tightening policy.

People’s Bank of China is moving in the other direction. However, they will have to find a delicate balance. They must keep an eye on inflation, and increase costs of U.S. dollars-denominated loans.

Analysts say that easing monetary policy may not come in overt moves like cutting the amount of cash that banks must hold as reserves, or the RRR — one of many policy tools that the central bank holds. China is likely to make targeted moves.

These are the reasons.

One, market divergence could lead to many negative consequences.

In a Monday note, Jefferies analysts noted that there are many Chinese businesses. property developers, have raised large amounts of U.S. dollar-denominated debt. It will be more challenging to pay this loan when the U.S. Dollar rises and U.S. yields begin to increase due to the Federal Reserve’s reduction of asset purchases.

Last week, the Fed published minutes of its meeting that indicated that the U.S. central banking is on track to tightening. This could happen as early as next month. As U.S. policymakers fret about the future, this move is a welcome one. whether inflation will persist

China also faces this challenge. China faces the same challenge. The producer price index is a measure for production costs in factories. It rose by an record 10.7% in September from a year ago.

Pinpoint Asset Management’s chief economist Zhiwei Zhang stated that persistent inflationary pressure restricts the scope for monetary policy easing.

Many economists now know that China must ease its economic policies.

Data for the third quarter of GDP were released Monday China’s economy slowed more than expected. power shortage has restricted factory production.A quarter of China’s GDP has been lost due to tighter debt regulations in the real-estate industry.

“The growth slowdown has hit levels policymakers can no longer ignore and we expect to see incremental loosening across three pillars – monetary, fiscal and regulatory,” BlackRock Investment Institute analysts said in a note Monday.

Beijing had a greater focus on earlier in the year. addressing social issuesHigh child-raising expenses in countries with rapidly ageing populations are a sign of this. A regulatory crackdown over the summerIt was also announced that all after-school tutoring businesses must significantly reduce their working hours.

Sun Guofeng is the head of the People’s Bank of China’s monetary policies department. He stressed to reporters that the bank’s monetary policy was “prudent.” He stated that producer prices would probably remain high in the future, however they will be moderated by the end.

Sun stated that the Fed statement was also known to Sun. While he did not address whether U.S. actions could affect China’s, he repeatedly claimed that China had numerous monetary policy instruments.

Analysts know that China’s unique economic structure relies more on an array of monetary policy levers,Instead of a single rate,

According to CNBC’s translation, Zong Liang (chief researcher at Bank of China), said that the Bank of China would loosen its monetary policies in Mandarin.

He said that while overall monetary policy should remain at an “normal” level, the central bank can ease policies for certain sectors. The PBOC, for example, could be a help to businesses that are struggling with the rising cost of raw material. Zong believes that support for economic stability will also include infrastructure.

China is trying to prevent a policy environment in which it supports businesses and ordinary consumers, he said.

Producer prices rose 10.7% in September, compared with a year earlier. However, consumer prices remained low and increased just 0.7% over the same period last year.

Economists expect China to lower its reserve requirement ratio (RRR), when it comes to monetary policies changes.

Aidan Yao (AXA Investment Managers, Senior Emerging Asia Economist), said that Beijing will be prompted to dial back its growth-restraining measures because of the weak Q3 results.

According to him the probability of a widespread RRR cut is now less likely after recent PBOC comments. But, if growth continues to falter further, a targeted move may still be possible.

Yao anticipates that local governments will use about 1.3 trillion Yuan ($203.3 Billion) from special bond sales to fund infrastructure investment.

Huang isn’t expecting Beijing to permit the economy to slow to a point where China could barely reach its GDP target for 6% growth. Most economists expect growth of around 8% this year.

However, Beijing is less likely to promote growth now that policymakers have shifted their attention to longer-term issues in the economy. “They may have a higher tolerance for slowdowns than before and a greater tolerance for risk.