The No.173 online seminar of the “Macro-Finance Salon”, also the 16th of the “Learning the Spirit of the Two Sessions – Finance Supports the Grand Start of the 14th Five-Year Plan” serial salon, jointly organized by the Department of Money and Finance of School of Finance, Renmin University of China (RUC) and the International Monetary Institute (IMI), was successfully held on December 26th, 2021. Zhao Ran, IMI Research Fellow and Associate Professor at School of Finance of Capital University of Economics and Business, delivered a keynote report entitled “The Outlook for Monetary Policies in China and the US”. Guan Tao, Global Chief Economist, BOC International; Xia Le, Chief Economist for Asia at BBVA Research; Zhao Xijun, Co-Dean of Academy of China Capital Market, RUC; and Zhu Mengnan, Deputy Dean of School of Economics, Xiamen University, commented on the report. The salon was presided by Wang Fang, Deputy Dean of School of Finance, RUC and IMI Deputy Director.

Professor Zhao Ran delivered a keynote report entitled “The Outlook for Monetary Policies in China and the US”. The report touched on the adoption of loose monetary policy by the People’s Bank of China and tapering started by the US Federal Reserve. The report also made a comparison of future monetary policies in China and the US. According to Professor Zhao, the US was faced with a decline in its economic status, in the internationalization of the US dollar, and in the enthusiasm for increasing holdings of US Treasury bonds. Moreover, the US was also afflicted by high inflation, deterioration of balance of international payments, among others. All these issues downgraded the US dollar’s credit rating and therefore damaged the US’ core interests. The monetary policy in the US was expected to undergo three changes in the future. First, the decline of the US dollar’ international status would lower the freedom of US monetary policy. Second, the focus of monetary policy objectives would shift from internal equilibrium to both internal and external equilibrium. Third, anti-inflation would become the next top priority for the Fed and the US government. As for China, with the continuous development of its political and economic strength, the deepening of the reform of its floating exchange rate system and further capital account liberalization, RMB’s international status and the independence of China’s monetary policy were rising rapidly. The focus of China’s monetary policy objectives would gradually transition from external equilibrium to internal equilibrium and to stabilize domestic economic growth would become China’s top priority.

Professor Zhao concluded by comparing the two countries’ monetary policies from three perspectives of monetary policy’s flexibility and independence, objectives and implementation. First, the freedom of monetary policy in the US would moderately diminish while the flexibility and independence of monetary policy in China would be substantially boosted. Second, external equilibrium may be incorporated into the objectives of monetary policy in the US, and anti-inflation will become the prime concern. By contrast, China’s monetary policy objectives would concentrate more on internal equilibrium, and steady growth would become the primary goal in the future. Third, the Fed would accelerate tapering and raise interest rates in the future while China may cut interest rates, but China would follow the principle of jogging and keep its monetary policy moderately prudent.