Fri, Mar 13, 2015 - Page 13 News List

Prudent monetary policy to be maintained: PBOC boss

NEW NORMAL:Zhou Xiaochuan said that money supply growth, liquidity are appropriate so monetary policy would not be altered as China adapts to slowing

Reuters, BEIJING

China has no need to change its prudent monetary policy stance, People’s Bank of China (PBOC) Governor Zhou Xiaochuan (周小川) said yesterday, after a raft of data suggested the world’s second-largest economy lost further momentum early in the beginning of the year.

“The new normal condition is not special. There are problems, [but] this does not necessarily require a new monetary policy formula,” Zhou told a news conference during the annual National People’s Congress in Beijing.

Money supply growth is appropriate, while policy adjustments have kept liquidity levels at appropriate levels, Zhou said.

Data released so far this year show the economy might already be at risk of missing the government’s newly minted growth target of about 7 percent for this year, which itself would mark a quarter-century low.

Growth in investment, retail sales and factory output all missed forecasts in January and last month and fell to multi-year lows. While exports picked up in the first two months, imports slid about 20 percent, pointing to persistent weakness in the economy, along with rising deflationary pressures in the factory sector.

China’s bank lending and broader credit growth declined last month from the previous month, the central bank said. Domestic banks extended new loans of 1.02 trillion yuan (US$162.94 billion), the central bank said in a statement, down from 1.47 trillion yuan in January.

China is likely to cut interest rates or reserve requirements again if consumer inflation drifts below 1 percent, a member of the central bank’s monetary policy committee told reporters on Wednesday, as he ruled out more support for the sagging property market.

The central bank has cut interest rates twice since November last year, and early last month reduced the amount of cash that banks must hold as reserves, freeing up fresh liquidity to flow into the economy to offset rising outflows of capital.

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