China's central bank will cut the reserve requirement ratio and interest rates at an appropriate time this year based on domestic and global economic and financial conditions while creating new tools to support technological innovation, said Pan Gongsheng, governor of the People's Bank of China.
"The current average RRR for financial institutions stands at 6.6 percent, leaving room for further reductions," Pan said at a news conference of the ongoing third session of the 14th National People's Congress on Thursday, adding that there is scope to cut the interest rates of structural monetary policy tools, which provide funding to commercial banks.
Pan said the central bank is also exploring the creation of new structural monetary policy tools to boost financing and investments in technology sectors, encourage consumption and stabilize foreign trade, while expanding the size and coverage of an existing central bank lending program for technological innovation and technical transformation.
Pan added that the PBOC will further enhance support for the capital market by making good use of two structural tools in collaboration with the China Securities Regulatory Commission to establish a regular institutional framework for capital market stability.
On the exchange rate policy, Pan reaffirmed PBOC's commitment to a market-driven exchange rate, maintaining flexibility while strengthening expectation guidance to prevent excessive fluctuations and ensuring the renminbi remains generally stable at a reasonable and balanced level.
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