China’s Central Bank would Keep Liquidity Reasonably Ample

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Key Takeaways:

  • The People’s Bank of China published the “Report on the Implementation of China’s Monetary Policy in the Fourth Quarter of 2021” on February 11.
  • China’s central bank stated that it would keep liquidity reasonably ample while increasing financing support for key sectors.

The People’s Bank of China published the “Report on the Implementation of China’s Monetary Policy in the Fourth Quarter of 2021” on February 11. China’s central bank stated that it would keep liquidity reasonably ample while increasing financing support for critical sectors. The People’s Bank of China (PBOC) stated in its fourth-quarter implementation report that it would meet the reasonable financing needs of the real economy without resorting to flood-like stimulus. In 2021, China’s new yuan-denominated loans totalled 19.95 trillion yuan ($3.13 trillion), an increase of 315 billion yuan from the previous year.

According to the PBOC at the time, the cut, the second of the year, would free up 1.2 trillion yuan in long-term liquidity. China reduced its reserve requirement ratio by 50 basis points in December to combat slowing economic growth. The PBOC stated that it would maintain the money supply and total social financing in line with nominal economic growth.

Zhang Jingjing, the chief analyst at Western Securities, wrote in a note that “We believe that structural monetary policy tools will continue to play an important role, which means that 2022 should see record usage of various re-lending facilities”.

The central bank’s weighted-average lending rate was 4.76% in December, down 27 basis points from the previous year. According to the statement, the central bank will also guard against systemic financial risks and will not use real estate as a short-term means of stimulating the economy.

Chaahat Girdhar
Chaahat Girdhar

I'm Chaahat Girdhar, a journalist by profession who's turning her dreams into vision and vision into reality. I'm curious and have an appetite for gaining new knowledge. So I'm looking forward to learning things in the better way possible.

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