MNI BRIEF: PBOC To Boost Money Supply Moderately: Report

The People's Bank of China will increase the base money supply at a moderate pace and push real loan rates lower to ensure the economy grows in a "reasonable range", the central bank said in its Q2 Monetary Policy Report Monday. Forward-looking policy will be improved to boost the recovery of small and medium-side businesses and sectors suffering from the pandemic, with continuation of from 2021 into 2022, it said, noting it will remain watchful for uncertainties from fiscal moves, issuance of government debt and policy changes of other major economies.

It will keep ample liquidity via various of tools, including its open market operations, relending and rediscounting, while guiding money market rates, noting it will not flood the market with excess liquidity and will stabilize leverage ratios.

The bank said inflation pressure in China is under control as the PBOC started to normalize its policy ahead of other major counterparts since last May, pointing out it will keep prices stable and there is no base for longer-term inflation and deflationary pressure. The PBOC will also ensure the yuan exchange rate is stable at a reasonable and balanced level and guide market expectations, whilst pushing pilots for opening up of the yuan's cross-border use in trade and investment and push the convertibility of the current account.