BEIJING (Reuters) – The deputy governor of China’s central bank said on Thursday there is ample monetary policy room to deliver further cuts to banks’ reserve requirement ratio (RRR), underlining market expectations for more easing measures to bolster the economy.
The world’s second-biggest economy started the year on a solid footing, offering some relief to policymakers as they try to shore up confidence and growth amid persistent weakness in the property sector.
“China’s monetary policy has ample room and rich policy tool reserves, and there is still room for cutting the RRR,” Xuan Changneng, deputy governor of the People’s Bank of China (PBOC), told a press conference in Beijing.
The PBOC announced a 50-basis points cut in RRR in January, the biggest in two years, and analysts believe at least one more reduction may be on the cards this year as policymakers try to put the economy on a more solid footing.
The decline in deposit costs and the shift of monetary policies in major economies will help with China’s interest rate policy operations, Xuan added.
China will promote effective investment, help resolve excess capacity, he said, expecting the country’s nominal economic growth target to be around 8% in 2024.
Premier Li Qiang unveiled China’s 2024 economic growth target of “around 5%” at the annual parliamentary meeting earlier this month, and promised to transform the country’s growth model as well as defuse risks in the property sector and local government debt.
But analysts have described the target as an ambitious one as a protracted crisis in the property sector, a key pillar of the economy, remains a major headwind for consumers and investors.
At the same press conference on Thursday, vice finance minister Liao Min said fiscal policy will provide necessary support to achieve the 2024 growth target and the country’s government debt is at “an appropriate level.”
(Reporting by Kevin Yao; Writing by Ellen Zhang; Editing by Kim Coghill and Shri Navaratnam)
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