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Monetary policy seen as prudent, neutral

China's monetary policy is expected to be more prudent and neutral, to rein in asset bubbles and guard against financial risks, economists have said. Last week the central bank, the People's Bank of China, raised the interest rate for seven-day repurchase agreements, a key tool used to adjust monetary policy, and for longer 14 and 28-day repo rates. In January the central bank also raised rates on its medium-term loan facility for the first time since it started the facility in 2014. China has had a prudent monetary policy since 2011. However, in practice the policy has been slightly loosening for a period of time due to downward pressure on economic growth, according to Zhang Xiaohui, assistant governor of the central bank.

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