MNI BRIEF: PBOC Maintains Prudent Policy; Boost Independence

The People's Bank of China will maintain its prudent monetary policy while boosting its independence in the face of possible monetary tightening globally, Deputy Governor Pan Gongsheng briefed Tuesday, emphasizing that China still has relatively large policy space.

Sun Guofeng, head of the PBOC Monetary Policy Department, noted that there is no big shortfall of base money and he expects liquidity supply and demand to remain broadly balanced in the coming months, with no great deviations in either direction. The cut to banks' reserve requirement ratio in July, which released CNY1 trillion of long-term funds, has helped to meet banks' liquidity needs by repaying some matured medium-term lending facilities, as well as prepare for any economic uncertainties and possible monetary shifts of developed economies, according to Sun.

To promote "common prosperity", it is important for the PBOC to insist on no return to a flood-like stimulus and maintain the stability of the yuan, according to Zou Lan, head of the PBOC Financial Market Department.