BEIJING- China’s central bank does not see an immediate need to ease monetary policy further, but will keep conditions accommodative to support a recovery in the world’s second-largest economy, four policy sources told Reuters.
A stronger-than-expected rebound in activity in the second quarter has reduced the urgency for the People’s Bank of China (PBOC) to act, after policymakers announced unprecedented emergency measures early in the year to deal with the shock from the coronavirus crisis.
The PBOC also wants to avoid the side-effects caused by excessive stimulus, such as a surge in debt and risks of bubbles in the property market, said the sources, who are involved in internal policy discussions.
Moreover, policymakers are keen to save their ammunition amid uncertainty over how long it will take the global economy to recover and rising Sino-US tensions, the sources said.
“We should keep monetary policy stable in the near term and leave some space for the future,” one of the sources said.
The PBOC did not immediately respond to Reuters’ request for comment.
That marked an escalation in the current easing cycle that started in early 2018, although it has not slashed interest rates to near zero or embarked on quantitative easing as have many other major central banks. —Reuters
