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China Central Bank to Apply Medium-Term Policy Loan for Yuan

China's central Bank announced it would inject more liquidity into maturing medium-term policy loans. This happened for the fourth month while the Central Bank continued to keep the interest rate unchanged.

The central Bank's decision was suitable for supporting the economy. It is stated that the People's Bank of China (PBOC) will continue to keep long-term funds sufficient.

Several traders and analysts also said that China's target is a modest economic growth target. And this also suggests that policymakers are comfortable with the pace of recovery.

Meanwhile, China ended more than three years of the zero-COVID policy. And since the economic reopening, this has immediately boosted consumption and business activity. But, they still expect a faster recovery, closing the possibility for monetary easing.

China is setting the target for economic growth this year, around 5 per cent at the annual session. Some investors also noted that China's monetary policy would remain stable. However, they are prioritizing continuity as economic challenges loom for Beijing.


China's Economy Shows Mixed Recovery, but Central Bank Still Will Adjust Policy

"The policy signals from the People's Bank of China (PBOC) and the National People's Congress (NPC) are to reduce the likelihood for the Medium-term lending facility rate to cut this year," said Tommy Wu, senior China economist at Commerzbank.

The Medium-term lending facility is a guide for the market and will trigger changes to the lending benchmark. And this news simultaneously strengthened China's economy in the first two months of the year, pushing the end of Covid restrictions.

Based on records from local Chinese banks, Beijing dropped its covid strategy in December and showed economic movements that peaked through January. The rebound in the economy also offers a guarantee for the stimulus investment

It suggests a policy to be supportive and China is predicted to experience an economic increase of 5.3% this year. This happens with the record that no risks are clouding the outlook. 

Wanting global demand and a struggling property market are the main problems for China, but they get worse by rising geopolitical tension. Meanwhile, China's central Bank will still adjust its monetary policy.

There may be cutting  banks' reserve requirements to release long-term liquidity. But for all of this, it is considered an effective tool to support the economy and recovery.

People's Bank of China Governor Yi Gang recently told a news currency that "People's Bank of China will provide forceful financial support. This is all done to support the stability and health of the economy. The focus is on green finance, tech innovation, infrastructure, and housing,"

China is also becoming increasingly ambitious, with a 2023 growth target. They also have a potential target of 6% to boost investor and consumer confidence. With this target, it is also the decision on the promising post-pandemic recovery and more support.

Based on Key Indicators, China Continues to be Classified as a Country that Drives Economic Growth

"We will adjust monetary policy tools in a timely and appropriate manner. Moreover, this is based on changes and needs in economic development," Liu said.

In response, the central Bank will again lower interest rates and reserve requirements ratios, which is at the appropriate level now. So this is also what makes the key indicators show that China is a country that continues to drive global economic growth.

The GDP target is around 5% for 2023. But for now, China will focus more on consolidating the foundation for stable growth and stimulating the market.

People's Bank of China will evaluate its structural tool. All of this is being done with the target of economic stimulus following geopolitical tensions and the Covid problem, which has yet to be entirely over. The central Bank's policies also make China a driver for economic growth.




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