PBOC pledges further economic growth support at third quarter meeting

China’s economy has continued to recover and grow as the country places top priority on stability while continuing to make progress, the People’s Bank of China (PBOC) said in a statement on Thursday.

At the third quarterly meeting of its monetary policy committee held in Beijing on September 23, it was agreed that by pursuing a sound monetary policy – that is, one that is flexible and appropriate and that maintains continuity, stability and sustainability – the central bank has scientifically managed market expectations, made great efforts to serve the real economy, and effectively prevented financial risks.

The meeting analyzed economic and financial developments both at home and abroad, and set the tone for a list of issues related to China’s economic growth.

Chinese regulators will do what is necessary to “contain the pandemic, stabilize the economy and maintain healthy development,” the PBOC said. It will also strengthen support for the real economy, stabilize employment and prices and preserve the overall stability of the macroeconomy.

The PBOC will step up its prudent monetary policies

The PBOC will strengthen cross-cyclical and counter-cyclical adjustments, accelerate the implementation of prudent monetary policy, and give full play to both global and structural monetary policy tools.

The central bank said it would strengthen the monetary policy transmission mechanism, keep liquidity reasonable and abundant, and shore up stable credit growth. Monetary tools will be leveraged to improve support for key sectors and industries affected by COVID-19, he said.

On September 20, the central bank announced that the latest one-year loan prime rate (LPR) remained at 3.65% and the LPR for more than five years was 4.3%.

As the LPR reforms continue to unleash their benefits, monetary policy transmission has become more efficient and lending rates have held steady with a slight decline, the PBOC said.

Effective financial support for the real economy

Policy-backed and development-oriented financial instruments will be used to support infrastructure development, the PBOC said.

The PBOC also said that it will guide financial institutions to provide more medium and long-term (MLT) loans to the manufacturing sector and focus on stabilizing industrial and supply chains, and guarantee financial support. to private companies commensurate with their contribution to the country’s economy. and social development.

The central bank will also put in place the necessary framework to stimulate effective financial support to the real economy, as well as improve the financial support system to stimulate innovation.

PBOC: Yuan plays a “role of stabilizer”

The Chinese yuan’s exchange rate is expected to be fundamentally stable and has moved in both directions with increased flexibility, playing its role as a stabilizer for the macroeconomy, the PBOC said after the yuan rallied in onshore and offshore markets on Thursday. after falling. at the lowest levels on Wednesday.

The central bank said it would deepen market-oriented reforms to further improve the flexibility of the yuan’s exchange rate. It will also guide companies and financial institutions to remain “risk neutral”, strengthen expectation management and keep the yuan exchange rate essentially stable at a reasonable and balanced level.

Promote a healthy “platform economy”

Meanwhile, the PBOC said it will promote the standardized, sound and sustained development of the platform economy and implement regular supervision thereof. The platform economy refers to digital platforms, including those used to conduct commerce online.

Local governments allowed to adjust mortgage rates

Meanwhile, separately on Thursday, Chinese regulators announced that some qualifying cities would be allowed to decide whether to maintain, lower or remove the mortgage rate floor for first-time home buyers until the end of this year. .

At the previous meeting, the central bank pledged to promote the stable and healthy development of the real estate market. He said he would make full use of his policy toolbox by adopting city-specific policies, to meet people’s basic housing needs, as well as their needs for better housing.

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