SHANGHAI: China’s yuan firmed against the US dollar on Thursday after comments from a Federal Reserve official reinforced market participants’ views that current US rates are enough to lower inflation which should pave the way for cuts later this year.

John Williams, President of the Federal Reserve Bank of New York, said on Wednesday that the Fed has made progress on lowering inflation, including for services, and sees the rate of price increases slipping to 2.25% in 2024 and 2% by 2025. “We are clearly moving in the right direction,” he said, adding “we still are a ways from our price stability goal.”

The spot yuan opened at 7.1700 per dollar and was changing hands at 7.1620 at midday, 104 pips firmer than the previous late session close and 0.75% away from the midpoint.

The spot rate is allowed to trade with a range 2% above or below the official fixing on any given day.