Mar 01, 2019 (China Knowledge) - China’s central bank has once again downplayed any chances of the use of aggressive monetary policy with a senior official reiterating that credit conditions will be adjusted by taking into account changes in the economic and financial situation to fine-tune the policies.
Such adjustments will take place in a measured way in order to avoid flooding the economy with credit as the central bank still has to guard against systematic risk in the financial system.
The central bank will continue to keep close watch over market liquidity conditions and the factors affecting it and also carry out dynamic assessments of these conditions and factors to prevent market participants from having overblown expectations.
These comments come after record lending in January this year has led to some having expectations of an incoming lending binge.
As the government continues to urge banks to give more loans to small and private enterprises to boost its slowing economy, there is the rising expectation that the government may use turn to stronger measures such as cutting benchmark interest rates to support economic growth.
However, the central bank is currently unwilling to make such moves as it already considers the country’s interest rates to be relatively low and wants to avoid excessive monetary easing in the market.
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