Chinese Central Bank Chief Reaffirms Monetary Policy Signals for the Remainder of 2020


Yi Gang, governor of the People’s Bank of China (PBOC) has provided further signals on the likely direction of Chinese monetary policy in the near-term.

In an interview with the Xinhua News Agency on 9 August, Yi said that Chinese monetary policy would be involve more “flexible moderation and targeted guidance,” as well as the “implementation of various policies that have already been unveiled for the stabilisation of enterprises and the protection of employment.”

Yi highlighted PBOC’s “comprehensive usage of multiple monetary policy tools, guidance of growth in the broad money supply and total social financing which is markedly higher than last year,” as well as “expediting rational growth in financial inclusion loans for small and medium-sized enterprises and medium and long-term loans for the manufacturing.”

The remarks by Yi during the Xinhua interview mark the third time in a week that the Chinese central bank has sent consistent signals on monetary policy, following a teleconference work meeting convened on 3 August, as well as the issuance of the 2nd quarter monetary policy execution report on 6 August, all of which contained similar phrasing.

Analysts expect that given current adjustments to monetary policy it will be difficult to maintain overall loosening subsequently, and expect PBOC to act more prudently and conservatively in future, while also making use of structural tools to raise the “direct reach” of monetary policy.

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