China's central bank said it will implement a moderately loose monetary policy this year, and introduce a combination of measures in support of economic development.
According to the People's Bank of China (PBOC), this year's monetary policy aims to bolster the real economy, prevent risks, and address constraints such as the interest rate gap between China and the United States and the interest rate gap between banks. The policy must be implemented at a reasonable speed and level.
"In light of changing situation, efforts will be made to keep the total amount, structure, interest rate, exchange rate and other aspects of monetary policy at a reasonable and balanced level, following the introduction of a policy combination," said Dong Ximiao, the chief researcher of Merchants Union Consumer Finance.
Industry insiders said that since the beginning of this year, the central bank has made many positive proposals for monetary policy in terms of total volume, interest rate, structure, exchange rate among others, which are conducive to further boosting market confidence.
In terms of total volume, there is still room to cut reserve requirement ratio, indicating that the central bank has the ability and willingness to increase macro regulation and support the real economy.
As for the structure, the central bank said it will study the creation of new structural policies, with a focus on supporting investment and financing for boosting scientific and technological innovation, promoting consumption and stabilizing foreign trade.
"Increasing financial support for major strategies, key areas and weak links will help promote smooth macroeconomic circulation, accelerate economic structural transformation and cultivate new growth drivers," said Wen Bin, the chief economist of China Minsheng Bank.
Regarding the exchange rate, the PBOC has reiterated that it will resolutely prevent the RMB exchange rate from overshooting, and has the experience, confidence and ability to maintain stable operation of the foreign exchange market.
The central bank said that it has sufficient reserve tools and policy space in the face of uncertainties in the macro environment, especially the external environment.
It said that many positive factors have underlined the improvement of the economic situation. With more proactive and effective macro policies continuing to take effect, it said, the financial system will provide more support for the recovery and improvement of the real economy and promote high-quality development.
China to implement moderately loose monetary policy, launch measures to support economy
