China will ease monetary policy and boost liquidity in the financial system with a series of measures, state media cited a central bank official as saying, in a bid to avoid suffering a sharp economic slowdown.
According to Xinhua news agency, the unnamed official at the People’s Bank of China said it planned to “steadily” introduce the measures, including cutting the amount of cash lenders must keep in reserve.
The report, published late on Wednesday, comes as the world’s No. 2 economy eases, with data last week showing it grew at its slowest pace in almost three years in the January-March quarter, while manufacturing stutters.
As well as easing reserve requirements, the report said the central bank would boost liquidity through its open market operations — referring to its sale or purchase of securities, which influences the volume of money and credit in the economy.
“The central bank will continue to implement a prudent monetary policy ... and maintain a reasonable level of interbank liquidity to facilitate a stable and relatively rapid development of the national economy,” the official said.
China will “fine-tune” its monetary policy to allow more growth in bank lending, the official added, reiterating remarks by other officials about the need to adjust money policy.
The People’s Bank of China has already cut bank reserve requirements twice since December last year, as policymakers look to get money through to the small -businesses and the agricultural sector that play a crucial role in the economy.
Chinese banks have already ramped up lending, issuing 1.01 trillion yuan (US$160.3 billion) in new loans last month, higher than the 710.7 billion yuan recorded in February, official data showed last week.
The central bank declined to comment on the report.