China central bank governor pledges stronger support to economy

CHINA’S central bank will step up the implementation of its prudent monetary policy to provide stronger economic support, governor Yi Gang said. 

The economy is facing “certain downward pressures” due to the pandemic and external factors even as domestic inflation is relatively low, Yi said in a meeting of G-20 central bank governors and finance ministers. The People’s Bank of China (PBOC) released a statement on his comments on Saturday (Jul 16). 

China’s economy grew 0.4 per cent in the second quarter, the slowest pace since the country was first hit by the coronavirus outbreak 2 years ago. It faces fresh risks from a resurgence in Covid infections, making it harder for the government to meet its 5.5 per cent growth target this year.

The PBOC has taken a cautious easing path this year as aggressive rate hikes by the US Federal Reserve widen its monetary policy gap with the US and drive outflows. It kept the rate on its 1-year policy loans unchanged at 2.85 per cent last Friday while rolling over 100 billion yuan (S$20.7 billion) of the maturing loans amid ample cash levels in the banking system. BLOOMBERG