Business / Policy Watch

China to stick to prudent monetary policy: PBOC

(Xinhua) Updated: 2015-07-15 09:38

BEIJING - The People's Bank of China (PBOC), the central bank, on Tuesday announced it "will continue to implement the prudent monetary policy, and improve the financial system's capability to serve the real economy".

The PBOC did not change its monetary policy stance after the latest quarterly meeting of its monetary policy committee, saying China will pursue a "prudent and balanced" monetary policy with more attention to striking a balance between tight and loose.

China's economic and financial developments are stable on the whole, but the complexity of economic and financial operations should not be underestimated, the PBOC said in a statement.

The central bank will use multiple monetary policy tools in a flexible manner and maintain moderate liquidity in the market to ensure loans and social financing register reasonable growth.

The PBOC said it will work to improve reform of the financial system, enhance the system's operational efficiency, improve the structure of financing, increase the proportion of direct financing, and reduce the cost of social financing.

High financing costs for Chinese enterprises, smaller firms in particular, has held back growth, experts said.

It also called for continued market-oriented interest rate reform, and for the renminbi's exchange-rate reform to keep it stable.

The global economy is undergoing profound adjustments after the financial crisis, with major economies staging divergent performance, noted the statement.

The United States has witnessed more positive economic signs, while the European and Japanese economies are showing mild recoveries with deflationary risks, but some emerging markets face difficulties, said the PBOC.

The central bank said it will follow global economic and financial developments and the behavior of capital flows.

The quarterly meeting was chaired by PBOC governor Zhou Xiaochuan, also the chairman of the committee, and attended by senior government officials and economists.

China's economy grew 7.4 percent in 2014, the slowest rate for 24 years. The PBOC has moved to combat the economic slowdown, cutting benchmark interest rates four times since November and lowering banks' reserve requirement ratio twice since February.

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