China Central Bank pledges to stregnthen monetary policy fine-tuning

China’s central bank has pledged to intensify its monetary policy fine-tuning in the second half of this year and improve credit policy to bolster the real economy. The central People’s Bank of China will also widen the use of its currency in cross-boarder trade and investment and gradually push ahead with capital account convertibility of yuan currency, the bank said in a statement. It reiterated the significance of making the monetary policy more forward-looking, targeted and effective to support steady and relatively fast economic growth. The statement came as analysts anticipate further cuts in interest rates and the reserve requirement ratio as China has recently seen weakening demand for its products and easing inflation. Dwindling orders from Europe and other trade partners have sapped China’s exports and, combined with a cooling property sector, slowed the country’s economic growth rate to 7.6 percent in the second quarter, the lowest level since the first quarter of 2009. To cope with the faster-than-expected slowdown, the PBOC has cut its lending and deposit rates twice this year and lowered the amount of funds that banks must keep in reserve for three times since December last year. The PBOC also called for carrying forward with financial reforms on Sunday, while urging more efforts to maintain financial stability. Authorities at all levels must hold firm to the bottom line of not letting any system-wide and regional financial risks occur, it said.