A major challenge for central banks around the world is how to best temper inflation with the use of monetary policy. In the case of China, the country’s central bank vows to adjust monetary policy appropriately and in a timely manner.
“China’s central bank will adjust monetary policy in a timely and appropriate manner, and cutting banks’ reserve requirements to release long-term liquidity will still be an effective tool to support the economy, top bank officials said on Friday,” Reuters reported.
It’s a particularly challenging feat for China’s central bank, especially given the economic challenges the country has endured over the past few years. In addition to COVID-19, China has dealt with challenges in its real estate market and a slumping tech sector due to stringent government regulations.
Now that the economy is gaining traction again, the second-largest economy is also having to deal with global inflation. As such, China’s central bank needs to adjust monetary policy in order to tamp down inflation, but to also maintain its economic recovery.
“Policymakers are looking to support a nascent recovery in the world’s second-largest economy after last year’s COVID-induced slump,” the report added. “Recent data shows activity is bouncing back at a better-than-expected pace, but China still faces many challenges including a weak property market and faltering exports.”
“The PBOC will provide ‘forceful’ financial support for the stable and healthy development of the economy,” People’s Bank of China Governor Yi Gang told a news conference.
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