MNI BRIEF: PBOC To Set Policy Based On Domestic: Offc'l Issues

The People's Bank of China will concentrate on the domestic economy, setting its own policy, whilst closely watching the global economic and financial situation

China will continue with its 'leading role' in policy normalization which started last May and maintain yuan flexibility, according to Sun Guofeng, head of the PBOC's monetary policy department. Policy will take both current and long-term issues into account, with enhanced support for key and weak sectors, Sun noted. The central bank will keep liquidity ample as the coming tax payment and the increasing local government debt issue will drain cash from the interbank market, Sun said.

Ruan Jianhong, head of the PBOC's statistics department, said lenders had kept credit support to the real economy strong, even though the move weighed on lenders' profitability to the tune of 2.7 pps last year, the first decline in nearly 2 decades, and counter-cyclical measures also boosted the overall leverage ratio. The leverage ratio is expected to remain stable after the economy recovers from the pandemic, Ruan said, Sun noted that regulators will make joint efforts with lenders to deal with the possible rising bad loans in the future.