People’s Bank of China (PBOC) Governor Yi Gang (易綱) said the central bank’s attention is to be centered on economic growth, a sign policymakers might shift gear toward supporting economic recovery as the nation gradually eases COVID-19 controls.
“Our focus is growth right now,” Yi said yesterday in a video speech given to a central bank conference in Bangkok. “We have a pretty accommodative monetary policy in place to help with economic recovery and [to] maximize employment.”
The growth rate is currently “somewhat slower than expected due to COVID and other factors,” Yi said, adding that inflation has been relatively subdued, and it would likely remain in a “moderate range” next year.
Photo: REUTERS
The central bank recently surprised market watchers by cutting the reserve requirement ratio for banks — unleashing more cash that banks can use for lending.
Economists expect the central bank to keep monetary policy relatively loose into early next year.
Speculation is also growing the Chinese Communist Party’s politburo, its top decision-making body, would likely signal a more pragmatic approach toward COVID-19 controls during its meeting this month, while placing greater focus on boosting growth.
Yi’s comments “confirmed the recent shift of policy focus to growth after the party congress” in October, Mizuho Bank foreign exchange strategist Ken Cheung (張建泰) said.
“In addition to the COVID policy, the reform in the property market has yielded progress and the PBOC is set to maintain its easing bias to support the property sector and boost growth after COVID hit,” he said.
Chinese stocks traded 0.4 percent lower yesterday after gaining in the previous three sessions.
The relaxation of some COVID-19 curbs and a shift in the official rhetoric around “zero COVID” has fueled hopes that the country might be preparing to reopen next year.
However, the economic recovery would remain bumpy, with growth likely to come in below 5 percent next year, economists surveyed by Bloomberg said.
The economy is forecast to expand 3.3 percent this year, which would be the second-slowest pace since the 1970s after 2020.
Aside from quantitative monetary policy tools, the central bank is also making use of structural instruments to boost its support to small businesses, the agriculture sector and private firms, Yi said.
The governor’s comments were part of a panel with other central bankers hosted by the Bank of Thailand and the Bank for International Settlements.
European Central Bank President Christine Lagarde, Reserve Bank of Australia Governor Philip Lowe and Bank Indonesia Governor Perry Warjiyo attended the event.
Yi called for stronger collaboration between advanced and emerging economies on macroeconomic policies, as indicators point to a rising possibility of a global recession next year.
Many emerging markets and low-income countries are facing pressures from depreciating currencies, capital outflows and inflation, he said.
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