Chinese Central Bank Flags Use of Monetary Policy, Reserve Requirement Cuts, to Deal with Coronavirus Impacts

The People’s Bank of China (PBOC) has flagged the increased use of monetary policy to mitigate the impacts of the coronavirus outbreak on the Chinese economy.

Chen Yulu (陈雨露), PBOC deputy-governor, said that the Chinese central bank would expand the vigour of adjustments to monetary policy, and that at present Chinese monetary policy still had “ample space.”

Chen made the remarks at a press conference held by the State Council’s news office on 24 February.

Chen also highlighted the need for dynamic adjustments to targeted required reserve ratio cuts, and enabling more banks that qualify to benefit from reductions.

Other measures that the Chinese central bank will continue to implement will include:

• Better employing the role of China’s policy banks,
• Continuing to maintain rationally ample liquidity,
• Employing the guidance role of policy rates,
• Causing overall interest rates to continue to decline,
• Reducing enterprise financing costs.

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