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China urged to ‘hurry up’ with moves to stabilise economy, stay ahead of the curve to avoid credit ‘collapse’
- On Monday, the People’s Bank of China (PBOC) unexpectedly cut borrowing costs on its medium-term loans for the first time since April
- There is still room for the PBOC to cut banks’ reserve requirement ratios, although this had been reduced by reductions in the past, said vice-governor Liu Guoqiang
China’s central bank will roll out more policy measures to stabilise the economy as downward pressure persists, and move ahead of the market curve, vice-governor Liu Guoqiang said on Tuesday.
On Monday, the People’s Bank of China (PBOC) unexpectedly cut borrowing costs on its medium-term loans for the first time since April.
Liu said it would widen the use of its policy tools to prevent a “collapse” in credit.
“We should hurry up, make our operations forward-looking, move ahead of the market curve, and respond to the general concerns of the market in a timely manner,” he told a news conference.
China GDP growth slows as population crisis, Covid-19 cloud economic outlook
China GDP growth slows as population crisis, Covid-19 cloud economic outlook
Liu said there is still room for the central bank to cut banks’ reserve requirement ratios (RRR), although this had been reduced by reductions in the past.
Sun Guofeng, head of monetary policy department at the PBOC, said the loan prime rate, the benchmark lending rate, would reflect the changes of market interest rates in a full and timely manner.
Sun said cross-border capital flows could show some volatility due to changes in international financial situations, but the impact from policy adjustments in developed countries, including the United States, would be limited.
The yuan exchange rate could deviate from its balanced levels in the short term, but over the medium and long term, market factors and government policy would help correct deviations, said Liu.
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