China’s central bank says it won’t be hasty with policy changes

FILE PHOTO: A man wearing a mask walks past the headquarters of the People’s Bank of China, the central bank, in Beijing, China, as the country is hit by an outbreak of the new coronavirus, February 3, 2020. REUTERS/Jason Lee

(Reuters) – China’s central bank will consider policy changes as the economy recovers, but it will not make hasty moves and any shifts would be based on accurate economic assessments, a vice governor of the People’s Bank of China (PBOC) said on Friday.

Liu Guoqiang said China’s economic recovery is on a solid footing due to the country’s effective virus control and policy measures to support growth.

“We should also consider the next policy step. Policy adjustments should be based on accurate assessments of the economic situation and cannot make hasty moves,” Liu told a briefing.

To support the economy, China’s financial institutions gave up 1.25 trillion yuan ($188.65 billion) in profits in January-October – by lowering interest rates and fees – and are on track to reach an expected target of 1.5 trillion yuan this year, Liu said.

Sun Guofeng, head of the PBOC’s monetary policy department, told the same briefing that China’s current interest rates are appropriate and monetary policy will be more flexible.

The PBOC has rolled out measures since February, including cuts in lending rates, banks’ reserve requirement ratios (RRR) and targeted support for virus-hit companies such as cheap loans. But analysts say the central bank has now shifted to a more steady stance as the economy rebounds.China’s economy grew 4.9% in the third-quarter from a year earlier as consumers shook off their coronavirus caution, although some risks, including from the pandemic and tensions with the United States, persist.