MNI INTERVIEW: PBOC Should Save Ammo Against Risks: Ex-Offic'l

     BEIJING (MNI) - The People's Bank of China should save its policy

ammunition as global risks rise on the spreading COVID-19 outbreak, Guan Tao,

former director of the international payments department at the State

Administration of Foreign Exchange told MNI.

     Arguing against joining the current round of global central bank action,

Guan noted the PBOC had moved into virus-fighting mode in early February and has

been guiding market rates lower since, via both a policy rate cut and liquidity

injections. 

     It will take time to see the full effects from the PBOC's unexpected cut in

banks' reserve requirement ratios on March 16, which is why the central bank did

not cut its medium-term lending facility rate this week, Guan said.

     Investors' negative reaction to the Federal Reserve's two large emergency

rate cuts shows that rushed and untargeted moves waste ammunition and erode

market confidence, he said.

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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