Beijing: China’s central bank is reiterating its pledge to lower interest rates and the reserve requirement ratio (RRR) for banks “at an appropriate time” to promote growth, with the economy continuing to face challenges both domestically and globally.
The People’s Bank of China’s (PBoC) monetary policy committee called for strengthening the intensity of the country’s monetary policy adjustments and making them more forward-looking, targeted and effective.
This is according to a statement last Friday following the panel’s quarterly meeting held in late December.
Members at the meeting reaffirmed the need to implement a “moderately loose” monetary policy to shore up growth.
China’s economy is generally stable, the readout said, while it also pointed to challenges such as insufficient domestic demand and an intensification of adverse effects thanks to changes in the external environment.
Monetary policy support is seen as critical to China’s economy in 2025, with US President-elect Donald Trump vowing to impose steep tariffs on Chinese goods.
The PBoC previously flagged it could free more cash for banks by cutting the RRR again one more time by the end of 2024.
It is now expected to make that move in the first quarter of 2025, keeping officials’ powder dry on a closely watched tool that could alleviate the negative impact from fresh US tariffs.
Meanwhile, PBoC committee members called for maintaining ample liquidity in the financial system and for guiding financial institutions to step up the extension of credit, according to the statement.
In a bid to improve the efficiency of fund utiliaation, the panel also called for a strengthening in the implementation of interest-rate policy and the prevention of funds from being idled or used for arbitrage. — Bloomberg
