Steady monetary policy, precise and powerful, creating a favorable monetary and financial environment

"Since the beginning of this year, China's economy has continued to recover and generally recovered." Pan Gongsheng, President of the People's Bank of China and Director of the State Administration of Foreign Exchange, pointed out at the 48th International Monetary and Financial Committee (IMFC) meeting a few days ago that in the near future, positive factors in China's economic operation are accumulating, highlights are increasing, and it is expected to improve. The growth rate of industry and service industry has improved, the recovery of market sales has accelerated, the scale of fixed asset investment has continued to expand, and the investment in high-tech industries has maintained a rapid growth. Next, China will pay more attention to the balance between economic growth and sustainability, and actively promote high-quality and sustainable development on the basis of maintaining reasonable growth.

Pan Gongsheng said that China's prudent monetary policy was precise and powerful, increased counter cyclical adjustment efforts, effectively responded to domestic and foreign risk challenges, and consolidated the economic recovery trend. In the next step, we should continue to make efforts and take advantage of the momentum to better play the dual functions of the aggregate and structure of monetary policy tools, focus on expanding domestic demand, boosting confidence, accelerate the virtuous cycle of the economy, and provide more powerful support for the real economy.

Since this year, the People's Bank of China has taken precise measures and continued to make efforts to promote the recovery of the macro-economy. Zou Lan, Director of the Monetary Policy Department of the People's Bank of China, said at the press conference on financial statistics for the third quarter of 2023 held on October 13 that, especially since August, the People's Bank of China has further increased its counter cyclical adjustment efforts, focused on expanding domestic demand, effectively boosted confidence and provided more powerful support for the real economy.

As for the next stage of monetary policy, Zou Lan said that the People's Bank of China will further implement a sound monetary policy, closely observe the effect of the previous policy, and accelerate the effectiveness of the policy. There is still enough room and reserves for monetary policy to cope with unexpected challenges and changes. It will continue to make counter cyclical adjustments to create an appropriate monetary and financial environment for activating the endogenous power and vitality of the economy.

Li Chao, chief economist of Zhejiang Merchants Securities, predicted that the monetary policy will continue to exert its power. Under the general background of preventing capital arbitrage from idling, the monetary policy will be lenient or slightly convergent. The focus will be shifted to credit policy, and the medium - and long-term loans to enterprises and residents will continue to be strengthened, thus enhancing the drive to the real economy. The reserve ratio reduction, interest rate reduction, structural policy instruments, and policy financial instruments with the attribute of "quasi finance" in the toolbox will continue to work.

Wu Chaoming, vice president of Caixin Research Institute, believes that the possibility of continuing to cut interest rates and RRR within the year is not excluded. According to the analysis of Galaxy Securities Research News, from the perspective of monetary policy, the changes in quantity and price may be carried out at the same time, and the reduction of reserve ratio and interest rate may be introduced.

key word: monetary policy People's Bank of China China Economics