MNI BRIEF: PBOC To Curb Any Overshooting Of The Yuan-MPC
The People’s Bank of China will firmly guard against any overshooting of the yuan exchange rate and rectify pro-cyclical behaviours in foreign exchange markets, according to the first quarter meeting of the PBOC Monetary Policy Committee.
In a statement on the PBOC’s website, the central bank said it will prevent the formation of one-way expectations and self-reinforcing cycles in the FX market, intensify efforts to implement existing monetary policies, maintain reasonable and adequate liquidity and guide credit expansion at a proper pace. (See:MNI: More Yuan Volatility Ahead, PBOC Vigilant)
The PBOC will promote moderate price increases and keep prices at a reasonable level, it said, adding that it will enrich the toolbox of monetary policy, introducing a re-lending tool for technology innovation and technological transformation, and leverage the role of its policy rates to guide down corporate financing and resident credit costs.
China's economy continues to recover, but still faces challenges such as insufficient demand and weak social expectations, and attention should be paid to changes in long-term yields in the process of economic recovery, it said.