On Thursday (June 16) the US Fed announced that it would keep key interest rates unchanged. Surely, this has certain impacts on China's economy and its monetary policy.

So, should China’s central bank cut interest rate too?

The research team at ANBOUND Consulting believes that the surplus of capital in general, the negative interest rate environment abroad together with the slowing economy at home means that the loose monetary policy could lose its effectiveness.

The need to stem capital outflows as well as to stabilize the RMB exchange rate also means that the central bank should not loosen monetary policy lightly and join its counterparts in cutting the interest rate and RRR.