Menu

Search

  |   Commentary

Menu

  |   Commentary

Search

PBoC to maintain prudent monetary policy but with flexibility to ensure reasonably adequate liquidity, says Scotiabank

The People’s Bank of China (PBoC) is expected to maintain a prudent monetary policy but with flexibility this year to ensure reasonably adequate liquidity, according to the latest research report from Scotiabank.

China has pledged more fiscal stimulus to spur economic growth amid the COVID-19 outbreak. Bloomberg reported Monday that Finance Minister Liu Kun wrote an article on Sunday in Qiushi, the ruling party’s flagship magazine, saying that China will further perfect and implement measures this year to reduce corporate taxes and cut unnecessary government expenses as the COVID-19 virus takes a toll on production.

China's central bank on Monday injected CNY200 billion of liquidity via 1-year medium-term lending facility (MLF) operation and CNY100 billion in funds through the seven-day reverse repos. It lowered the 1-year MLF rate by 10 bp to 3.15 percent from 3.25 percent at the previous operation on January 15, while keeping the interest rate on 7-day reverse repos unchanged at 2.40 percent that was cut from 2.50 percent on February 3.

In addition, China’s leaders are seeking to strike a balance between keeping people safe and getting vital industries back on track. As we know, the nation’s businesses are gradually getting up to speed as the country deals with disruptions from the highly contagious coronavirus, the report added.

Moreover, it seems China is confident in bringing the coronavirus outbreak under control by April. Xinhua news agency reported on Monday afternoon that China considers postponing the third annual session of the 13th NPC and the 13th CPPCC set to start on March 3 and March 5 respectively, on concerns over the health risk.

However, it was reported earlier by the SCMP newspaper that China and Japan agreed on Saturday to continue preparations for a state visit by Chinese President Xi Jinping in April. According to the Hong Kong-based SCMP newspaper, Yang Jiechi, China’s top foreign policy official, will travel to Japan later this month to work out the timing of Xi’s trip.

"We believe the Chinese central bank will deliver a 10 bp reduction in the 1-year Loan Prime Rate (LPR) on Thursday, February 20," Scotiabank further commented in the report.

  • Market Data
Close

Welcome to EconoTimes

Sign up for daily updates for the most important
stories unfolding in the global economy.