“China's monetary policy should be alert to the lagging effect and subprime mortgage risks while focusing on stabilizing prices and the property market,” the 21st Century Business Herald said in its editorial story, citing a study by Bank for International Settlements (BIS).

Additional takeaways

“A 1% drop in nominal short-term interest rates would lead to a 5% increase in housing prices, taking three years to materialize.”

“But the Chinese property market is not, for now, seeing such price growth, the newspaper noted. Developed countries in rate hike cycles to tame high inflation, face a growing concern of housing bubbles bursting, as both the home price-to-rent and home price-to-income ratios in 19 OECD countries are higher than those before the 2008 financial crisis.”

Market reaction

Despite a word of caution from the BIS, USD/CNY is trading 0.05% lower on the day at 6.6943, as of writing.