The People's Bank of China (PBOC) has unveiled its assessment of the first quarter's monetary policy execution, highlighting a balanced and effective strategy that is paving the way for economic recovery across a favorable monetary and financial landscape.
At the year's outset, the PBOC implemented a significant move by reducing the reserve requirement ratio by 0.5 percentage points. This action injected over 1 trillion yuan ($153.85 billion) of medium- to long-term liquidity into the market, strengthening economic resilience and ensuring sufficient liquidity for sustained growth.
Utilizing a multifaceted approach, the central bank employed a combination of open market operations, medium-term lending facilities, and re-lending and rediscounting tools. These measures reinforced financial stability and maintained adequate liquidity within the financial system.
In an effort to stabilize and lower financing costs, the PBOC targeted a 0.25 percentage point reduction in re-lending and rediscount interest rates for rural sectors and small businesses. Additionally, it continued to promote market-oriented reform of deposit rates and guided a 0.25 percentage point decrease in the over-five-year Loan Prime Rate (LPR) in February.
Demonstrating a commitment to adaptability and inclusivity, the central bank introduced structural adjustments in credit. A 500 billion yuan facility dedicated to technological innovation and transformation was established, alongside relaxed criteria for inclusive loans to micro and small enterprises, fostering innovation and supporting smaller businesses.
Looking ahead, the PBOC pledges to uphold a prudent monetary policy while intensifying support for the real economy. Continuing the momentum of interest rate marketization reforms remains a cornerstone strategy. By leveraging innovative mechanisms such as reforms to the LPR and market-oriented adjustments of deposit rates, the central bank aims to further stabilize and reduce financing expenses for corporations and households.
Reference(s):
China's central bank: Q1 monetary policy balanced and effective
cgtn.com
