China’s central bank keen to avoid ‘irrational panic’ despite economic slowdown, says governor
- People’s Bank of China governor Yi Gang repeats pledge to maintain the stability of the yuan despite US trade war frictions by monitoring cross-border capital flows
- Former long-time aide of current Vice-Premier Liu He tells Tsinghua University bank will pay more attention to market interest rates rather than ‘will of officials’
China’s central bank will continue to fine-tune its monetary policy in a timely manner to better offset the slowdown in the country’s economy and look to maintain the stability of yuan exchange rate by closely monitoring cross-border capital flows to avoid “herd behaviour and irrational panic”, People’s Bank of China governor Yi Gang said on Thursday night.
“In the face of external shocks, we must take timely measures to prevent market instability and especially to stabilise public confidence,” Yi said in a lecture at the school of economic management at Tsinghua University.
“There indeed has been some external impact on our monetary policy this year, including trade friction and other market changes. Our monetary policy should be adjusted to reflect the economic situation.
“Amid the downward pressure on the economy, [we] need a modestly loose monetary environment. But it can not be too loose considering the need for external equilibrium. The [yuan] exchange rate will be affected if interest rates are too low.”
Yi also repeated the pledge to maintain the stability of the currency around current levels.
“The yuan has remained relatively stable so far this year, despite under the unfavourable conditions coming from China-US trade frictions,” Yi said.