In the early hours of 19 march, the federal reserve released the latest outcome of the two-day monetary policy conference, announcing that the interest rate of the federal fund would remain unchanged at 3. 5 to 3. 75 per cent between the target areas and that it would generally meet market expectations. This was the second consecutive meeting of the federal reserve since 2026, at which interest rates remained unchanged。
The decline in interest rates in the federal reserve during the year is expected to be further delayed and less frequent than the market forecast, and global financial market shocks have intensified. The three major indices of the united states share have been significantly lower and the international precious metals market has returned sharply. On the same day, the renminbi fell slightly against the united states dollar, with the return on the medium- and long-term national debt going up, and the people's bank stated that it was firmly committed to maintaining the smooth functioning of financial markets such as stocks, bonds and foreign exchange. Other analysts have argued that the spill-over effect of the fed's policy is more agitation than a decision for the medium-term dynamics of domestic financial markets。
Rmb, us dollar, double-strength continuation
In february and february 2026, the united states dollar index went up in succession, reaching a peak of 100. 54 on 13 march, with the first 100 integer pass in nearly four months and then fluctuations。
On march 18, local time, the fed collapsed and simultaneously released the hawks at the post-conference launch, with the strong us dollar upwards again breaking the 100-point mark。
During the same period, after seven consecutive months of appreciation of the rmb exchange rate, it reached the top of the 6. 85 level, entering march 2026, with a slight depreciation of the rmb onshore and offshore against the united states dollar, but remained volatile around 6. 90。
On 19 march, the renminbi fell across the three main lines of the united states dollar exchange rate. Among them, the people's bank of china authorized the china foreign exchange centre to publish the average exchange rate of the inter-bank foreign exchange market of the renminbi at the current rate of us$ 6. 8975, which is a reduction of 66 basis points on a single day compared with the average price of 6. 8909 on the previous day。
Also, according to wind data, on the same day, the off-shore renminbi was devalued against the united states dollar and gradually increased, with a daily devaluation of over 200 basis points; more closely reflecting the expected level of off-shore renminbi-to-united states dollar saws expected by international investors, which generally fluctuated around the 6. 90 junction。
At 17. 15 p. M. On that date, the chongryon-united states dollar was reported to have depreciated by 0. 33 per cent in the day and the chongryon-united states dollar by 6. 9042 per cent in the day。
However, the renminbi is currently operating in a biased manner relative to other major non-united states currencies. According to data disclosed by the china monetary network, the cfeds index for the exchange rate of the three main renminbis has recently risen to the highest level since the beginning of 2025. Of these, the cfets exchange rate index is updated at 100. 15, with an increase of 0. 50 per cent over the previous value。
According to wang qing, the chief macroanalyst in east china, china and the united states have maintained a steady return to economic and trade relations, the confidence of the remittance market has been constantly restored and the need for a high trade surplus has been massively released, all of which have provided important support for the recent appreciation of the renminbi's exchange rate. The fed has continued to suspend interest-rate cuts, boosting the dollar index and generating some passive depreciation of the renminbi against the dollar。
With regard to the subsequent exchange rate movements, wang qing believes that, in the short term, given the continuation of a stable external economic and trade environment, our exports will continue to grow more rapidly in the quarter, combined with the current high exchange rate sentiment, which is expected to continue. This means that the exchange rate of the renminbi will be more resilient than that of other major currencies as the dollar index rises, and that the “two-strong” pattern of the dollar and the renminbi will continue for some time。
Liu tao, a senior researcher at the guangcai censorship institute, stated that while the fed’s moratorium on interest-rate reductions would form a gradual downward pressure on the renminbi, external disturbances would be more of a short-term shock, and it would be difficult to change the stable pattern of the renminbi at a reasonable level of equilibrium, underpinned by the fundamentals of domestic economic resilience and a high trade surplus, the effective smoothing of exchange-rate instruments by the people’s bank and expected management, and the continued demand for corporate remittances and the willingness of foreign investment to deploy its assets to sustain the exchange rate。
Long-term debt interest rates will shock in the short term
When the fed failed, it went up in parallel with the rate of return on united states debt. According to wind, on 19 march, the rate of return on united states debt rose at various rates over the 2-year, 5-year and 10-year periods. At 1715 hours as at the same date, the return on united states treasury debt for the 10-year period had risen to 4. 281 per cent, representing a single-day increase of 0. 37 per cent。
In fact, in the past month, most commodity prices have risen, and most of the decade-old national debt yields of the world's major economies have risen, driven by a combination of factors, including the escalation of geo-conflicts and the slowdown in united states economic growth. The yield curve of china's bonds shows a split pattern of “short-end bottom, long-end upper-end” and is much less volatile than us debt。
Wind data show that on 19 march, the main inter-bank interest-rate active bond yields were mostly down, at 1645 hours as at that date, with a 10-year sovereign debt yield of 0. 6 basis points, 1. 8340 per cent, and a 30-year bond rate of 1. 45 basis points, 2. 330 per cent. Short-term national debt yields of one year, two years and three years all show a downward trend。
On the same day, there was a collective increase in the collection of the national debt, of which the principal contract for the 30-year period rose by 0. 10 per cent to $111. 07 and the main contract for the 10-year period by 0. 07 per cent to $108. 33. On 16 march, however, the 30-year national debt stock once touched $110. 36, a new low since october 2024。
The executive director of the ministry of research and development of the east, von lin, told beijing’s correspondent that the recent rise in long-term debt yields had been driven mainly by the sharp rise in crude oil prices due to the us-iraq conflict, rising inflation expectations, and the market’s expectation of a large-scale release of ultra-long-term special national debt after the two conferences, while macroeconomic and financial data published recently were generally over-anticipated, putting upward pressure on long-debt interest rates. Short-term debt interest rates have moved downwards, supported by a smooth financial landscape and increased market-based co-deposit regulation, which has led to lower rates for ppis。
The fed continues to suspend interest rates, and how does the bond market follow? According to von lin, geo-conflicts continue to widen, and inflation transactions continue, while the fed’s announcement that interest rates will not be reduced and hawks signal may affect the market’s expectations of domestic monetary policy, so that the general environment in which debt markets operate is generally fragmented。
“but a sharp rise in oil prices would also put downward pressure on the economy, and domestic monetary policy, with my predominance, would continue to be liberal, which would constrain interest-rate space. In general, long-term debt interest rates are expected to shock in the short term, and short-term debt is still holding back, but the arbitrage space is no longer sufficient to limit the further downfall of short-term debt rates.” von lin explains。
Monetary policy remains based on internal balance
In its monetary policy statement, the federal reserve stated that the impact of the situation in the middle east on the united states economy was not yet clear and that the economic outlook continued to face greater uncertainty. In addition, inflation remains somewhat high. The simultaneous publication of the economic forecast summary (sep) and the interest rate “point-line map” sends a signal of a hawk, and the market expects a fall in interest rates for the federal reserve and further delays in interest-rate reductions。
Whether or not the fed has cut interest rates, the “my-dominated” rhythm of china’s monetary policy will not change. Earlier, the people's bank had repeatedly stated that china's exchange-rate policy was clear and consistent, and that monetary policy insisted on me, taking into account internal and external balances。
On 19 march, according to the network of officials of the people's bank of china, the committee of the people's bank of china held an expanded meeting on 18 march, at which it stressed the need to continue to implement moderate and liberal monetary policies, to maintain the basic stability of the rmb exchange rate at a reasonable level of equilibrium, and called for the full exercise of the macroeconomic prudential management and financial stability functions of the central bank and the firm maintenance of the smooth functioning of financial markets such as stocks, bonds and foreign exchange。
On the same day, the hong kong financial authority also cautioned that there was greater uncertainty about future monetary policy in the united states and that recent tensions in the middle east region had brought greater variables to oil prices and to inflation in the united states。
In wang qing's view, the expected fall in the fed's interest rate has had little impact on the flexibility of domestic monetary policy in the direction of moderate easing. On the one hand, we are the second largest economy in the world, and monetary policy is conditional on me; on the other hand, the current fundamentals of the central american and american economies, in particular inflation, vary widely. These have determined that domestic monetary policy this year will operate with moderate easing, mainly in the light of the macroeconomic and financial situation in the country。
Wang qing indicated that, taking into account a combination of factors, the people's bank is more likely to implement a reduction in interest rates in the course of the year, which is expected to drop by between 10 and 20 basis points in mid-year, and by about 0. 5 percentage points. At the same time, the wealth of instruments and experience gained in the regulation of a stable market at the regulatory level does not necessitate an overestimation of the impact of the renminbi exchange rate factor on the flexible adjustment of domestic monetary policy。
It is also expected that domestic monetary policy will remain based on internal balance, that liquidity will remain reasonably adequate and that the domestic financing environment will be stabilized through calibration and structural instruments. Such a combination of “outside tights” can lead to a marked division of market style: high dividends, low valuations, stable cash flow defenses are pitted against each other, and growth and subject unit relying on lower interest rate expectations, underperforming performance will continue to withstand adjustment pressures。
Liu tao stressed that the spill-over effect of the fed's policy was more a disturbance than a decision for the medium-term dynamics of domestic financial markets. Core market drivers continue to come from the intensity of domestic economic recovery, the impact of industrial policy on the ground and the recovery of business profits. As long as domestic fundamentals are steadily improving and policy support is sustained, external interest rate constraints will only lead to phased fluctuations and will not change the internal-led operating logic of equity a and debt markets。
