The bank pledged to further lower borrowing costs while keeping liquidity at a reasonable and ample level.
Liu Guoqiang, Vice Governor of the People’s Bank of China, said the epidemic’s pressure on the economy would be short-lived and would not change the country’s sound economic fundamentals.
Guoqiang said that the positive elements in the economy were gathering steam, citing robust growth in epidemic-control sectors, a relief of potential in new industries, new businesses, ample market supply and calmer market sentiment.
He said that in the short term, the novel coronavirus outbreak would rattle certain aspects of the economy such as loan growth, consumer prices and debt ratio.
“For instance, fewer outdoor activities and work resumption delay would discourage the borrowing demand of consumers and certain industries.
“But the impact is temporary and will fade with progress being made in epidemic control and factories gradually returning to work,’’ he said.
Guoqiang said the central bank would continue to keep liquidity at a reasonable and ample level, push for reform of loan prime rate (LPR) and China’s new market-oriented benchmark lending rate.
“As well as lower borrowing costs to ease the financing strain for smaller companies.’’
According to him, the one-year LRP fell on Thursday to 4.05 per cent from 4.15 per cent a month earlier, while the above-five-year LPR fell five basis points from the previous reading to 4.75 per cent.
He said that it was a boost to market liquidity and a boon for small firms amid the country’s fight against the epidemic.
He also said that adjustment in the benchmark deposit rate would be subject to future economic fundamentals such as economic growth and consumer prices.
“The central bank will next make proper counter-cyclical adjustments, implement the prudent monetary policy in a flexible and appropriate manner and improve the monetary transmission mechanism via reforms to manage short-term downward economic pressure.
“Meanwhile, China will avoid adopting a deluge of strong stimulus policies to minimise the epidemic’s impact on the economy and keep it running in a reasonable range.’’
Guoqiang further said that China’s new Yuan-denominated loans hit 3.34 trillion Yuan (475.78 billion U.S. dollars) in January, a year-on-year rise of 110.9 billion Yuan, (central bank data showed).
“The M2, a broad measure of money supply that covers cash in circulation and all deposits, rose 8.4 per cent year-on-year to 202.31 trillion Yuan at the end of January.’’