China's Central Bank Plans to Keep Policy 'Prudent'

People's Bank of China (PBOC) Governor Zhou Xiaochuan News Conference

Zhou Xiaochuan.

Photographer: Qilai Shen/Bloomberg
  • NDRC deleted earlier comment on further monetary easing
  • Statement suggests PBOC doesn’t plan to cut rates: Citic

Amid fresh calls for further monetary easing, China’s central bank reiterated it plans to keep monetary policy "prudent" this year.

The People’s Bank of China said it will use multiple tools to keep liquidity at reasonably ample levels and maintain reasonable credit growth in the second half, according to a statement released Wednesday after a meeting PBOC Governor Zhou Xiaochuan held with the heads of local branches. Monetary policy will stay prudent, with flexibility and fine-tuning when appropriate, the statement said. 

Researchers at the National Development and Reform Commission, the country’s top economic planner, joined some market analysts Wednesday in calling for interest rates and required reserved ratios to be cut when appropriate. The rare comment on monetary policy from the NDRC was later deleted.

"The PBOC statement shows it sees less need and doesn’t plan to cut interest rates," Ming Ming, Beijing-based head of fixed-income research at Citic Securities Co., wrote in a note Thursday. "Monetary easing would add pressure on the yuan and breed bubbles in financial markets, neither of which the central bank wants."

— With assistance by Yinan Zhao

Before it's here, it's on the Bloomberg Terminal. LEARN MORE