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BEIJING (MNI) - The People's Bank of China will prioritise growth over
other monetary policy targets as the coronavirus adds to the challenges facing
an already slowing economy, Vice Governor Pan Gongsheng told reporters Friday,
stressing the central bank has a "very sufficient toolbox".
"In implementing monetary policies, we should consider the multiple factors
of internal and external balance, such as economic growth, leverage, inflation
expectations and exchange rate," Pan said. "Given the context of the coronavirus
outbreak and the downward pressure on the economy, it is even more important to
maintain economic growth," he said.
The PBOC will increase countercyclical measures, add sufficient liquidity
and use monetary tools including targeted reserve requirement ratio cuts to
shore up growth, Pan said.
Other key points from the briefing by Pan, Vice Minister of Finance Yu
Weiping and Zhou Liang, a vice chairman of the China Banking and Insurance
Regulatory Commission (CBIRC).
-- Financial markets have a "relatively high probability" that the loan
prime rate, to be announced on Feb. 20, will fall given lower interest rates in
both financial and money markets, said Pan.
-- The central bank will strike a balance between pro-growth and
stabilizing leverage, Pan said, noting China's macro-leverage ratio has remained
basically stable at about 250% in the past ten quarters, Pan said. The economy
will quickly stabilize when the epidemic eases, and resumed consumption and
investment will contribute to a recovery, he said.
-- The PBOC has set CNY300 billion in special relending at lower than
3.15%, compared with the latest LPR at 4.15%, to support companies fighting the
virus outbreak, Pan said.
- Non-performing loans for small and micro companies will rise amid the
epidemic, though the impact is temporary, said Zhou of CBIRC. The regulator will
increase the tolerance of the NPL for SMEs. With banks having 180% provision
coverage, a rise in NPLs of small businesses can be dealt with. The NPL ratio of
small companies was 3.22% in 2019.
- Regulators may delay the implementation of new regulations on asset
managers accordingly, said Pan.
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