China’s central bank announced on 26th September that it will intensify monetary policy changes and fortify coordination between monetary and fiscal policies in order to aid economic growth in the face of a “complex and severe” external environment.
In a summary of its monetary policy committee meeting on Tuesday, the central bank stated that although China’s economy has made steady advancement, it is increasingly facing challenges, such as increased trade barriers.
Global economic momentum is slowing down, the performance of major economies is diverging, and uncertainty lingers regarding inflation trends and monetary policy changes.
“It needs to better implement a suitably loose monetary policy, enhance counter-cyclical adjustments, and better utilize both the aggregate and structural roles of monetary policy tools,” the central bank said.
Policy strength and speed need to be managed carefully based on domestic and international economic conditions, and monetary measures implemented properly so as to maximize their impact, the central bank said.
The central bank promised to provide sufficient liquidity, steer financial institutions to raise credit supply, and keep a close eye on the bond market, especially shifts in long-term yields.
It also vowed to strengthen coordination between the monetary and fiscal policies to be able to promote stable economic development and reasonable price levels.
Recently, China’s central bank governor vowed to employ an array of monetary policy instruments to provide sufficient liquidity, attempt to lower funding costs, and underpin economic rebound.
In spite of August data indicating that the Chinese economy is slowing down, authorities seem to be taking no rush to implement key stimulus policies due to solid exports and a rally in the stock market, market observers said.
Analysts still expect new stimulus measures – including monetary easing and fiscal support – in the coming weeks as the economy weakens.
