Prudent monetary stance to be kept
Print Edition
China will keep a prudent monetary stance and balance between adjusting its economic structure, undertaking reform and curbing risks, the People’s Bank of China said in its third-quarter currency policy committee report.
The PBOC said it will use open market operations, reserve requirement ratio and short-term liquidity operations to adjust interbank liquidity as well as enhance communication with the market and the public to soothe expectations.
It will also encourage banks to improve liquidity and risk management to support economic growth to create a stable monetary environment.
“The aim of our policy is to adjust structure, encourage reform, and drive industrial upgrading,” the PBOC said yesterday. “The policy will maintain stable overall money supply and improve the structure.”
The report was released after the market recovered from a liquidity crunch at the end of October, which sent borrowing costs among banks to a four-month high. In June a similar money crisis caused interbank borrowing rates to surge to a 10-year high as the PBOC did not add money to the market. The central bank resumed reverse repurchase activities on October 29 after a two-week suspension.
Premier Li Keqiang said on Monday that monetary policies should not be eased when the market is hit by short-term money crunch.
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