China central bank notes positive economic signs, pledges market support tools
The People's Bank of China's third-quarter monetary policy report says key economic indicators show more positive changes. It will maintain moderately loose policy, boost counter-cyclical adjustments, and strengthen capital market tools to ensure stable financial market operations.
The People's Bank of China (PBOC) said in its third-quarter monetary policy report that the country's main economic indicators have shown more positive changes. However, it warned that challenges remain, including weak demand relative to supply, structural divergence and external shocks.
The central bank stated it would persist in implementing a moderately loose monetary policy and increase counter-cyclical adjustments to achieve the annual economic and social development targets. It pledged to strengthen the use of two monetary policy tools supporting capital markets, including the use of a bond market non-bank large-sum redemption swap facility, to maintain the stable operation of stock, bond and foreign exchange markets.
The PBOC said it is closely monitoring monetary policy changes at major overseas central banks and continuously strengthening analysis and monitoring of banking system liquidity supply and demand, as well as money market changes. The bank will comprehensively use and adjust monetary policy tools according to domestic and international economic and financial conditions and financial market operations, and will appropriately manage the intensity, pace and timing of policy implementation.
The report called for pushing forward interest rate pricing benchmark reform, moving from a system that relies relatively solely on the Loan Prime Rate (LPR) to a more diversified pricing benchmark. It will guide financial institutions in exploring the issuance of floating-rate loans linked to the DR001 benchmark.
Separately, the report noted that small and medium-sized enterprises face difficulties in receiving payments, which negatively affects the smooth circulation of the economy and reduces the transmission efficiency of monetary policy. The PBOC said it will continue to strengthen management of electronic accounts receivable certificates, strictly limiting their duration and size.