China’s monetary policy has ample leeway to meet challenges – Business & Finance

BEIJING (Reuters) – China’s monetary policy has ample room for maneuver and sufficient tools, including further cuts in bank reserve requirements, to meet new challenges amid a fragile economic recovery, said a comment published in the state-owned Securities Times on Sunday.

China’s economy grew just 0.4% in the second quarter from the same period last year, down sharply from 4.8% growth for the first three months, it said on Friday. the government, as widespread lockdowns to extinguish COVID-19 outbreaks have hampered the second-largest economy.

While June data showed signs of improvement, analysts do not expect a quick recovery as China sticks to its strict zero COVID policy, the country’s property market is in a deep collapse and the global outlook darkens.

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“As for the second half of the year, the foundations for our economic rebound are still not solid, and economic operations are still facing many uncertain and unstable factors,” Sunday’s commentary said.

“To deal with new challenges and changes that may exceed expectations, monetary policy has sufficient leeway and many tools.”

But many analysts say the People’s Bank of China has limited room for further easing amid concerns over capital outflows, as the U.S. Federal Reserve and other central banks aggressively raise interest rates. interest rates to fight against soaring inflation.

The Securities Times commentary cited China’s relatively constrained monetary policy during the pandemic, preemptive policies aimed at stabilizing capital outflows, including cuts in banks’ foreign exchange reserves and a more flexible yuan currency, among the factors that would provide a buffer against external shocks.

“We will keep the yuan exchange rate fundamentally stable at a reasonable and balanced level and proactively and resolutely handle new challenges and changes,” he said.

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