China's central bank pledges to step up policy support for growth

China’s central bank said on Friday (Sep 26) it will step up monetary policy adjustments and strengthen coordination between monetary and fiscal policies to support economic growth amid a “complex and severe” external environment.

In a summary of its monetary policy committee’s quarterly meeting held on Tuesday, the central bank said that while China’s economy has made steady progress, it faces mounting challenges, including rising trade barriers.

Global economic momentum is weakening, major economies are showing divergent performance, and uncertainty persists over inflation trends and monetary policy adjustments.

“It is necessary to better implement an appropriately loose monetary policy, strengthen counter-cyclical adjustments, better leverage both the aggregate and structural functions of monetary policy tools,” the central bank said.

The central bank said policy strength and pace should be carefully managed according to domestic and global economic conditions, and monetary measures effectively implemented to maximise their impact.

The central bank pledged to maintain ample liquidity, guide financial institutions to increase credit supply, and closely monitor the bond market, particularly changes in long-term yields.

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It also pledged to enhance coordination between monetary and fiscal policies to help promote stable economic growth and reasonable price levels.

On Monday, China’s central bank governor pledged to use a range of monetary policy tools to ensure ample liquidity, try to drive down funding costs and support economic recovery.

Despite August data suggesting the Chinese economy is losing momentum, authorities appear to be in no hurry to roll out major stimulus measures given resilient exports and a stock market rally, market watchers said.

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Analysts still expect new stimulus measures – including monetary easing and fiscal support – in the coming weeks as the economy weakens. REUTERS