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PBOC to maintain prudent monetary policy

2012-09-26 08:32 Xinhua     Web Editor: qindexing comment

China's central bank said Tuesday it will maintain the prudent monetary policy while fine-tuning it at an appropriate time to promote a stable and relatively fast growth.

"We will continue to implement the prudent monetary policy, make it more targeted, flexible and forward-looking, while fine-tuning it according to the economic situation development," the People's Bank of China (PBOC) said in a statement after its third-quarter monetary policy meeting.

"The current economic and financial operations show signs of stabilizing at a slower pace and the consumer price situation is basically stable," the statement said.

It said the central bank will employ various monetary tools to guide credit supply to grow at a steady and moderate pace and maintain reasonable social financing scale.

"Global economic growth remains weak and we will closely watch the impact of recent rescue and stimulus policies taken by the European Union and the United States," it said.

The central bank has twice cut the benchmark interest rates and reserve requirement ratio (RRR) this year to buoy slowing economic growth, which registered its lowest rate in more than three years in the second quarter of 2012.

Despite of increased speculation of more RRR cuts, PBOC favors more delicate monetary tools and it is reluctant to resort to blunt monetary instruments like RRR, analysts said.

PBOC pumped a record 290 billion yuan (45.74 billion U.S. dollars) into the money markets via reverse repurchase agreements Tuesday in an effort to ease a cash crunch towards the quarter end and the forthcoming Mid-Autumn Festival and National Day holiday starting from Sept. 30.

It will also steadily push forward market reform of the interest rates' formation system and improve the renminbi's exchange rate mechanism to strengthen its two-way flexibility, according to the statement.

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