PBOC Stresses Policy Flexibility as Economic Pressures Persist

(Bloomberg) -- China’s central bank said it’ll keep monetary policy flexible and work to lower funding costs for businesses as the economy still faces strong headwinds.

The People’s Bank of China will work to ensure the transmission of monetary policy and use market-focused reform mechanisms to lower the real interest rate for loans, according to a quarterly report. It will keep the yuan basically stable at reasonable, equilibrium levels and maintain a balance between steady growth and risk prevention, it said.

The comments come as China’s economy appears to be reaching the end of a cyclical bottom with improving global demand and the prospect of a phase one trade deal with the U.S. buoying sentiment.

Policy makers have issued a wide range of measures to keep the momentum going into 2020, from allowing freer movement of labor to pledging more support for private firms. Meanwhile, the PBOC ordered banks to price all lending using the new benchmark starting this month, a move that could help reduce overall borrowing costs for businesses and households.

The central bank also repeated its pledge to maintain sufficient liquidity, according to the statement released after the fourth-quarter meeting of the bank’s monetary policy committee, which Governor Yi Gang chairs.

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