The People's Bank of China (PBOC) has announced that its monetary policy for the first quarter has been both balanced and effective, setting a solid foundation for the country's ongoing economic recovery.
Early in the year, the PBOC made a significant move by reducing the reserve requirement ratio by 0.5 percentage points. This decrease injected over 1 trillion yuan ($153.85 billion) into the economy, enhancing liquidity and strengthening economic resilience.
Utilizing a combination of open market operations, medium-term lending facilities, and re-lending and rediscounting tools, the central bank ensured that liquidity remained sufficient, thereby reinforcing financial stability.
In addition to boosting liquidity, the PBOC took steps to lower financing costs. It implemented a targeted reduction of 0.25 percentage points in re-lending and re-discount interest rates for the rural sector and small businesses, making credit more accessible.
The bank also continued to advance market-oriented reforms of deposit rates and guided a 0.25 percentage point decrease in the over-five-year loan prime rate (LPR) in February, further reducing borrowing costs for businesses and households.
Demonstrating its commitment to adaptability and inclusivity, the PBOC introduced structural adjustments in credit. This included a 500 billion yuan facility dedicated to technological innovation and transformation, as well as relaxed criteria for inclusive loans to micro and small enterprises.
The central bank remains committed to maintaining prudent monetary policies while intensifying support for the real economy. Continued interest rate marketization reforms, along with innovative mechanisms like the loan prime rate and market-oriented adjustments of deposit rates, are seen as key strategies to stabilize and reduce financing expenses for both corporations and households.
Reference(s):
China's central bank: Q1 monetary policy balanced and effective
cgtn.com
