Home » The “matching” of monetary policy is expressed more clearly and emphasizes grasping the relationship between the two largest financing markets – Xinhuanet Client

The “matching” of monetary policy is expressed more clearly and emphasizes grasping the relationship between the two largest financing markets – Xinhuanet Client

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People’s Bank of China Emphasizes Relationship Between Financing Markets in Monetary Policy Report

On February 8, the People’s Bank of China released the “China Monetary Policy Implementation Report for the Fourth Quarter of 2023,” providing insight into the country’s monetary policies and goals for the near future. The report emphasized the need to maintain a balance between the two largest financing markets, bonds, and credit, in order to meet expected economic growth and price levels.

According to the report, the focus of monetary policy in the next stage will be on maintaining a flexible, moderate, precise, and effective approach. This will involve guiding the reasonable growth and balanced release of credit, maintaining appropriate liquidity, and aligning the scale of social financing and money supply with economic growth and prices. The People’s Bank of China also intends to deepen the market-based reform of interest rates and improve the loan market quotation rate formation mechanism.

Industry analysts have noted that the report’s emphasis on “maintaining the scale of social financing and money supply to match the expected goals of economic growth and price levels” signals a shift towards a more comprehensive and balanced approach to monetary policy. This shift takes into account both economic growth and price levels, guiding and stabilizing expectations more effectively.

The report also highlighted the need to maintain reasonable growth in financing and monetary aggregates and to carefully consider the relationship between bonds and credit. This indicates a broader perspective on financial support for the real economy, recognizing that financing support is not limited to credit alone. Direct financing channels, such as bonds, are seen as more efficient and are considered essential to the support of the financial system to the real sector.

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The People’s Bank of China’s updated monetary policy approach signals its commitment to maintaining strong policy support for economic recovery in the future. This report provides valuable insights into the central bank’s strategies for navigating China’s evolving financial landscape, providing reassurance to both domestic and international markets.

(Reporter: Zhang Mo)

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