The People’s Bank Of China (PBOC) headquarters stand at night in the financial district of Beijing, China (Photographer: Tomohiro Ohsumi/Bloomberg)

China to Keep Prudent, Neutral Monetary Policy, PBOC Says

(Bloomberg) -- China will maintain a prudent and neutral monetary policy while also assuring reasonable and ample liquidity, the People’s Bank of China said in a statement on Saturday.

China’s overall exchange rate and market expectations are stable, the PBOC said at its third-quarter meeting. The central bank will manage the “floodgates” of monetary supply to maintain reasonable and ample liquidity, it said.

The bank acknowledged “more severe” global challenges and said it will step up policy fine-tuning. The country will continue to deepen financial system reform and open up the sector, said the bank.

PBOC aims for balance among interest rates, exchange rates and international payments to ensure stable and healthy development of the economy and to stabilize market expectations. The bank also vowed to guard against financial risks and reaffirmed more financial support to the real economy and private sector.

Leading indicators for China’s economy show growth continued slowing in September amid the escalating trade war with the U.S. The September purchasing managers indexes for the manufacturing and services sectors due to be released on Sunday are both expected to edge lower, according to forecasters surveyed by Bloomberg.

Premier Li Keqiang vowed to further cut taxes, administrative fees and red tape in an effort to support the real economy, according to a government statement on Friday. The remarks followed president Xi Jinping’s pledge that the nation will “unswervingly” encourage, support and protect development of the private economy, while at the same time encouraging state-owned enterprises to be “stronger, better and bigger.”

Analysts say growing uncertainty will keep China from increasing borrowing costs for some time. Most PBOC watchers expect the central bank will continue raising the amount of liquidity in the financial system in the fourth quarter, according to a Bloomberg survey.

To contact Bloomberg News staff for this story: Niu Shuping in Beijing at nshuping@bloomberg.net

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