Date
24 November 2017
Experts believe the People's Bank of China may have to adjust the benchmark interest rate in the long term. Photo: Bloomberg
Experts believe the People's Bank of China may have to adjust the benchmark interest rate in the long term. Photo: Bloomberg

Targeted RRR cuts may be extended to other sectors: experts

The central bank’s targeted cuts on the reserve requirement ratio may be extended to other areas besides the rural sector, First Financial Daily reported Tuesday, citing Guo Tianyong, the director of the research center on the Chinese banking industry at the Central University of Finance and Economics.

Other targeted easing measures such as rediscount rate and relending policies may continue to be implemented, Guo said, adding that the benchmark interest rate may also be adjusted in the long term.

Wen Bin, a senior expert at Minsheng Bank’s development planning department, also said that if funds outstanding for foreign exchange see negative growth in the coming months, the central bank may need to deal with the siutation by having a comprehensive cut in RRR.

The remarks were made after the People’s Bank of China (PBoC) released a press statement on discussions of the Monetary Policy Committee for the second quarter. Portions of the release – “positive changes are beginning in the economic and financial structure” and “multiple monetary policy tools will be employed flexibly” — have caught the attention of economic experts.

Li Zhiqiang, chief analyst at Minsheng Bank Financial Markets, said “positive changes” in China’s economy are mainly reflected in the consistent rise in the purchasing managers’ index, which has risen for four months in a row to 51 in June.

He also said shadow banking risks have been reduced due to more stringent supervision. Other changes in the financial market include a faster increase in credit growth and stronger two-way fluctuation of renminbi exchange rates.

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JH/JP/CG

EJ Insight reporter

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