China’s central bank vows flexible approach as it acknowledges uneven economic picture
PBOC pledges ‘moderately loose’ monetary policy given a ‘more complex and volatile’ environment and domestic ‘structural divergence’
China’s central bank pledged to maintain a “moderately loose” monetary policy while calling for a more forward-looking, flexible and targeted approach, flagging “structural divergence” as a key domestic challenge for the first time, in a statement published on Wednesday.
The remarks – in a readout from a meeting of the monetary policy committee of the People’s Bank of China (PBOC) on Saturday – came as China’s economy grows increasingly uneven, with artificial intelligence-related sectors, hi-tech manufacturing and exports outperforming the broader economy while domestic consumption and private investment remain weak.
The committee reiterated its accommodative policy stance, saying it would promote stable growth and “a reasonable recovery in prices”.
In outlining its approach for the coming months, the readout dropped last quarter’s pledge to “strengthen monetary policy regulation”, placing greater emphasis on policy flexibility in response to domestic and global conditions.
The readout described the external environment as “more complex and volatile”, citing more frequent geopolitical tensions and trade frictions. Domestically, it added “structural divergence” to its assessment of challenges, alongside weak demand and external shocks.
Compared with the meeting readout in the first quarter, the PBOC appeared to “have acknowledged softer economic momentum” this time, according to a Goldman Sachs research note on Thursday.