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China still holds scope to further cut RRR, says PBOC governor

By Zhou Lanxu | | Updated: 2024-03-06 16:41
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Pan Gongsheng, governor of the People's Bank of China, speaks at a news conference on economy for the second session of the 14th National People's Congress in Beijing, March 6, 2024. [Photo by Feng Yongbin/]

China still has the scope to further cut the reserve requirement ratio as intensified macroeconomic adjustments are needed to cope with complex and changing international and domestic situations, said Pan Gongsheng, governor of the People's Bank of China, the country's central bank.

Addressing at a press conference of the ongoing second session of the 14th National People's Congress on Wednesday, Pan said the average RRR of China's banking industry - the proportion of money that lenders must hold as reserves - is currently 7 percent and has the room for further decline.

"We still have enough tools and enough policy room for maneuvers," Pan said.

The overall financing cost will be further lowered, Pan said, as the PBOC will deem keeping prices stable and promoting a moderate recovery in prices as an important consideration of monetary policy adjustments while taking into account the soundness of banks' balance sheets.

The central bank will also set up a relending facility to support technological innovation and transformation and continue to adopt a relending facility to support carbon emission reductions.

Pan added that factors such as a narrowing gap between domestic and foreign monetary policy cycles, a weakening of the US dollar's appreciation momentum and the rising renminbi settlements in foreign trade all help offer more room for China's monetary policy and are conducive to the renminbi's exchange rate stability.

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