Xuan Changneng, the deputy governor of the People’s Bank of China (PBOC), has underscored the significant flexibility available within China’s monetary policy framework. He has pointed out the potential for further adjustments to the banks’ reserve requirement ratio (RRR), aligning with market expectations for additional easing measures to support the country’s economy.
China’s economy has initiated the year on a steady trajectory, offering a degree of reassurance to policymakers amid ongoing challenges within the property sector. The affirmation of ample flexibility in monetary policy comes as authorities endeavor to uphold confidence and stimulate economic growth amidst persistent vulnerabilities in the real estate market.
During a press briefing, Xuan Changneng stated, “China’s monetary policy has significant room for maneuvering and a wide range of policy tools at its disposal, with further potential for reducing the RRR.” This indicates the possibility of additional cuts following the 50-basis points reduction implemented in January.
Analysts anticipate at least one more adjustment in the RRR this year as policymakers strive to stabilize economic conditions and spur growth.
Xuan also highlighted that the decline in deposit rates and changes in monetary policies across major global economies would complement China’s interest rate policy initiatives, providing further support to its monetary policy operations.
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