MNI BRIEF: PBOC's Yi Satisfied With Rates, RRR Cuts Effective

People’s Bank of China Governor Yi Gang told a briefing on Friday that said he was satisfied with the current real interest rate and that a reduction in the reserve requirement ratio would be an effective way to inject liquidity, suggesting limited room for policy rate cuts and the possibility of a lower RRR depending on the economic outlook.

“The real interest rate is at an appropriate level… and the RRR cut is an effective method to unlock long-term liquidity and maintain liquidity at a reasonable and balanced level, ” said Yi. He said 2% consumer inflation in 2022 was a satisfying result as the central bank insisted on a prudent policy stance.

The PBOC will continue to maintain ample liquidity at a reasonable level through various tools and deliver growth in M2 and total social financing basically in line with normal GDP expansion, he said. The Bank will strengthen the use of structured tools to support weak and key sectors, such as green finance, new energy, hi-tech, and small businesses.

Pan Gongsheng, vice governor of the PBOC, said property market activity was improving after the country’s reopening and with the help of the previous supportive measures,. He added that the PBOC will continue to support demand from first-house buyers and new citizens, facilitate development of rental houses, and push the sector to grow in a new pattern of development.