Chinese Central Bank to Maintain Prudent Monetary Policy

The People’s Bank of China will continue to maintain “prudent” monetary policy in 2015, keeping credit growth stable while having its hands free to fine-tune policy when necessary, the regulator said in an online statement on Friday.

However, the central bank said it would quicken the pace of market-oriented interest rate reform and push forward on increasing yuan convertibility in the capital account.

The People’s Bank of China (PBOC) also said it would take steps to prevent systemic risks in the financial sector, a sign that regulators will maintain pressure on off-balance sheet lending and shadow banking.

China has made a series of moves to clamp down on shadow banking in recent months, including tighter regulations on the usage of bond market and interbank assets for refinancing.

The announcement reiterates the PBOC’s commitment to stable monetary policy, even as speculation mounts that Beijing will have to take steps to boost growth and fend off deflationary pressures, in particular loosening monetary policy by cutting reserve requirement ratios (RRR) for banks.

via Reuters

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza