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China will keep normal monetary policy as long as possible, says central bank governor

EconomySep 28, 2021 06:06AM ET
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© Reuters. Governor of People's Bank of China (PBOC) Yi Gang attends a news conference on China's economic development ahead of the 70th anniversary of its founding, in Beijing, China September 24, 2019. REUTERS/Florence Lo/Files

BEIJING (Reuters) -China's central bank governor Yi Gang said China will stay with normal monetary policy settings for as long as possible, and that the yield curve can also maintain a normal and upward sloping shape.

"China will prolong the time it implements normal monetary policy as much as possible," Yi said in an article published on the People's Bank of China website on Tuesday.

China's potential economic growth rate is still expected to remain in the range of 5% to 6%, he said.

China stood pat on its benchmark lending rate for corporate and household loans for the 17th straight month at its September fixing, matching market expectations.

Some analysts expect another cut to the amount of cash banks must hold in reserve later this year, after a cut in July, although officials' comments earlier this month cooled expectations for imminent easing.

The world's second-largest economy rapidly recovered from a pandemic-induced slump last year, but recent data showed momentum weakening, with the vast manufacturing sector facing higher raw material costs and production bottlenecks, and more recently, electricity rationing.

After gross domestic product (GDP) expanded a record 18.3% on year in the January-March period, growth slipped to 7.9% in the second quarter. China has set a GDP growth target of "over 6%" for 2021, one which analysts think it will meet comfortably.

Goldman Sachs (NYSE:GS) cut China's economic growth forecast for 2021 to 7.8% from 8.2% on Tuesday, citing downward pressures.

China will keep normal monetary policy as long as possible, says central bank governor
 

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