China central bank, PBOC, unexpectedly cut its short-term policy interest rate due to growing worries about slowing growth and the need to stimulate recovery. The PBOC reduced the seven-day reverse repurchase rate by ten bps to 1.9%. The move is seen as a pre-emptive action ahead of the US Fed’s meeting, with the intention of mitigating the rate cut’s impact on the yuan. Despite the yuan weakening against the dollar by 3.6% this year, a potential pause in the Fed’s rate hikes may mitigate the impact of the PBOC’s easing measures on capital outflows and the yuan.