China's central bank left a key interest rate unchanged on Thursday, as authorities appear in no rush to ease monetary settings despite the U.S. Federal Reserve's decision to reduce rates just hours earlier.
Resilient exports and a sharp stock market rally have allowed policymakers to withhold fresh stimulus, market watchers said, even with a broader economic slowdown.
"Although the economy is slowing as expected, the magnitude of the deceleration appears not as big as we assumed," Hui Shan, chief China economist at Goldman Sachs, said in a note.
"Details of the August activity data and on-the-ground color suggest that the resilience in Chinese exports is likely to persist, and the Chinese government may be shifting some planned policy support from this year into next year."
The People's Bank of China (PBOC) injected 487 billion yuan ($68.56 billion) worth of seven-day reverse repos through open market operations on Thursday, keeping the rate steady at 1.40% from the previous operation.
The seven-day reverse repo rate now serves as the economy's main policy rate.
Despite China's recent gloomy data, Ting Lu, chief China economist at Nomura, believes major stimulus could risk inflating a stock bubble, but said the central bank may deliver a modest 10-basis-point rate cut over the coming weeks if the markets correct.
China's stock market has been on a tear, with the benchmark Shanghai Composite Index (.SSEC) hovering near its 10-year highs.
Some analysts also see chances of monetary easing measures later this year to ensure the world's second-largest economy remains on track to meet this year's growth target of "around 5%."
"There are still chances of easing in the fourth quarter," said Xing Zhaopeng, senior China strategist at ANZ.
"The current slowdown in growth is not yet sufficient to undermine the annual 'around 5.0%' growth target. The 15th Five-Year Plan and long-term structural reforms remain key priorities. Following the Fourth Plenary session, policy focus may shift back to short-term growth."
China's top leaders will hold the fourth plenum in October.
($1 = 7.1033 Chinese yuan)
