(Bloomberg) -- China's central bank pledged to keep its monetary policy flexible and responsive to changing economic conditions, with an overriding objective of achieving stability.
The People's Bank of China will adjust the strength, pace and focus of its monetary policy as needed, the central bank said Monday in a post on its official Wechat account. The statement was the first in a series planned in relation to the annual National People's Congress meetings, which begin on March 5.
The PBOC has cut interest rates, reduced the amount of cash banks must hold in reserve, and boosted credit expansion to help bolster a slowing economy. The government will disclose its main economic goals for the year at the NPC, with major banks like Goldman Sachs Group Inc. and Morgan Stanley expecting a growth target of above 5%.
The PBOC's statement Monday gave an overview of how monetary policy has helped support the economy, reiterating its goals to boost credit expansion and reduce the overall financing costs for businesses.
The central bank acknowledged risks to the outlook from monetary tightening in developed nations, rising geopolitical tensions and short-term downward pressure on the domestic economy. However, it said China has the ability and conditions to effectively respond to those shocks and can keep both economic operations and overall inflation stable.
China's prudent monetary policy, even during the pandemic, has helped to keep consumer-price growth stable despite soaring commodity costs and higher inflation in advanced economies, the PBOC said. That prudent stance has also helped China maintain a steady yuan exchange rate amid volatility in global markets, it said.
Steady Yuan
China's prudent monetary policy has helped stabilize the yuan, which in turn has helped economies and finance operations around the world, the statement said. The PBOC has signaled preference for a stable currency in reviews of the yuan's performance since 2018.
The onshore yuan extended its advance to highest since 2018 as it's increasingly being touted as a haven currency amid tensions in Ukraine. Still, the PBOC said in the report that the yuan has shown two-way movement.
China's experience of sticking to its goal of keeping the yuan stable, even in the face of the pandemic, has proved currency stability is “a fundamental part of monetary and financial environment that keeps the economy operating in a reasonable range,” the PBOC said.
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With assistance from Bloomberg
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