Free Trial

MNI Policy: China Needs Moderately Loose Monetary Policy: PBOC

MNI (Beijing)
     BEIJING (MNI) - China needs loose monetary conditions to revive its slowing
economy, though the extent of the loosening may be limited by factors including
the need to protect the currency, Yi Gang, governor of the People's Bank of
China, said at a forum in Beijing on Thursday.
     China's current account surplus this year may only be 0.1-0.2% of the GDP,
Yi said. It needs to increase the flexibility of the yuan to deal with internal
and external risks confronting the economy, Yi said. 
     Shadow banking, unusual volatilities of the market, external impact and
credit risks of key industries are considered "major risks," Yi said.
     China's macro leverage has been stable since last year at about 250% of the
economy, Yi said. However, Yi warned against risks that external impact on
monetary policies may spread into debt, FX and stock markets. A strong dollar
and trade frictions caused pressure on the yuan, Yi said. 
     In formulating policies, China needs to consider the following four
aspects: keeping prudent and neutral monetary policy with proactive and fine
adjustments, coordination of policies that moderate the expansion and
contraction of credit, utilizing multiple sources to channel funding to private
and small businesses, deepening financial reform and "smoothening the
transmission mechanism of monetary policies," Yi said. 
--MNI Beijing Bureau; +86 10 8532 5998; email: william.bi@mni-news.com
[TOPICS: M$A$$$,M$Q$$$,MI$$$$,MGQ$$$]

To read the full story

Close

Why MNI

MNI is the leading provider

of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.

Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.