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 A worker works at a production workshop in Nanjing, East China's Jiangsu province, March 25, 2022. （Photo/Xinhua） The People's Bank of China, the country's central bank, said on Thursday it will use multiple monetary tools to step up support for the real economy and reduce corporate financing costs. Economic experts said they expect the PBOC to launch high-profile easing measures, including a cut in the reserve requirement ratio this week at the earliest, while the possibility of a near-term interest rate reduction exists. "The PBOC will punctually and flexibly use multiple monetary tools, improve the functioning of monetary policy on both the aggregate and structural fronts, and beef up support for the real economy," said Ruan Jianhong, a spokeswoman for the central bank. With policy assistance, the country's credit growth is expected to be steady and facilitate economic recovery, Ruan said, adding that China's long-term economic fundamentals remain solid despite resurgent cases of COVID-19 and a rise in external uncertainties. Ruan made the remarks at a news conference on Thursday after the State Council, China's Cabinet, decided at an executive meeting on Wednesday to lower the reserve requirement ratio at an appropriate time. The RRR refers to the proportion of money that lenders must hold as reserves. China last cut the RRR in December by 0.5 percentage point, sending the weighted average RRR to 8.4 percent. Sun Guofeng, head of the PBOC's monetary policy department, said the RRR cut will be part of the central bank's stepped-up efforts to reduce financing costs in the real economy and strengthen financial assistance to sectors hit hard by COVID-19, such as small and micro enterprises and self-employed businesses. Sun added that the PBOC will also launch two targeted re-lending facilities at an early date to boost technological innovation and inclusive elderly care services. Apart from a near-term RRR cut, the PBOC might also cut the interest rate of its medium lending facility, a key policy interest rate, on Friday, said David Qu, a China economist at Bloomberg Economics. Such high-level monetary support has become necessary as the recent surge in COVID-19 dealt a blow to economic activity, with Shanghai bearing the brunt of the hit, Qu said. Wen Bin, chief researcher at China Minsheng Bank, said he now sees a lower possibility of an interest rate cut this month as the PBOC is poised to opt for the high-profile move of an RRR reduction. The loan prime rate, a benchmark market-based lending rate to be unveiled on April 20, may still fall as an RRR cut would reduce the funding costs of financial institutions, Wen said. The central bank also said at the news conference it would better meet the reasonable housing demand of homebuyers and help local governments in stabilizing local property markets. Since the beginning of March, in the face of weakening demand, banks from more than 100 cities have reduced mortgage rates, making market-oriented adjustments adapted to local situations, according to the PBOC. Qu at Bloomberg Economics said the central government may continue to keep the framework of property sector regulations unchanged but allow local governments to ease local property curbs to maintain property market stability and prevent a marked slowdown in the sector. |
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