Increasingly, however, markets are also focusing on changes out of the world's second-largest economy, attempting to analyze its policy decisions to understand how vast flows of Chinese funds will react.
But the Federal Reserve system is quite unlike China's economic policy regime.
How does China manage its monetary policy?
1. Open market operations, OMO
In China, open market operations mostly involve two processes called repurchase or reverse repurchase agreements. The former term, as it is used in China, means removing liquidity from the system when the PBOC sells short-term bonds to some commercial banks.
2. Reserve requirement ratio, RRR
The reserve requirement ratio refers to the amount of money that banks must hold in their coffers as a proportion of their total deposits. Lowering the required amount will increase the supply of money that banks can lend to businesses and individuals, and therefore cutting borrowing costs.
3. Benchmark interest rates
The PBOC controls the benchmark one-year lending and deposit rates, which affects the borrowing costs for banks, businesses and individuals.
4. Rediscounting
The PBOC offers an option to banks to "rediscount" the loans that they extend to their customers.
The monetary policy tool involves the central bank buying up existing loans from commercial lenders, giving them some extra liquidity.
5. Standing lending facility, SLF
Standing lending facility is also a type of PBOC lending to commercial banks. Introduced in 2013, such loans have a maturity period of one to three months — longer than funding options such as the open market operations.
6. Medium-term lending facility, MLF
Chinese banks get funds with even longer maturities — typically three months to a year — from the PBOC through the medium-term lending facility. The funding channel, introduced in 2014, allows the central bank to inject liquidity into the banking system and influence interest rates for longer-term loans.
7. Pledged supplementary lending, PSL
As one of the newest monetary policy tools in China, pledged supplementary lending was introduced to guide long-term interest rates and money supply. Such funds are injected into selected banks so that they can provide loans to specific sectors such as agriculture, small businesses and shantytown re-development. The banks that have received those particular funds are the three Chinese "policy" lenders: China Development Bank, Agricultural Development Bank of China and the Export-Import Bank of China.
Reference: CNBC
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