MNI BRIEF: PBOC To Control Pace To Prevent Side Effects: Pan

The People's Bank of China will calibrate the intensity and pace of its policy to avoid excessive moves from reducing policy effectiveness and causing long-term side effects, while taking measures to smooth out economic fluctuations, Governor Pan Gongsheng said in an article in People's Daily on Thursday. 

Due to economic restructuring and credit structure changes, the credit demand of the real economy is evolving, therefore, enhancing the utilisation efficiency of existing funds and optimising fund allocation are equally important as increasing new loans, he noted, pointing out the need of balancing support for economic growth and the health of financial institutions. (See MNI PBOC WATCH: Rate Cuts Pushed Out, Structural Tools Eye)

The Bank will gradually establish a short-, medium-, and long-term base money supply mechanism to maintain abundant liquidity in the banking system, and the PBOC will place less emphasis on quantitative targets, he argued. 

The role of the central bank's policy interest rates will be strengthened, with the width of the short-term interest rate corridor narrowed, to smooth the transmission from policy rates to market rates, he said.Monetary conditions will keep in line with maintaining price stability and better supporting key sectors, he continued.