China promises financial support in a catastrophic outbreak

The People’s Bank of China (PBOC) Governor Yi Gang yesterday said he would take steps to support SMEs and sectors hit by the COVID-19 outbreak to keep policies flexible to support the economic slowdown. I promised. Moderate mitigation measures.

But Lee also said prices should remain stable amid rising global inflationary pressures.

“China’s monetary policy is accommodative and comfortable, and we are ready to support SMEs with more equipment as needed,” Yi said. Said in a video speech to the Boao Forum for Asia.

Photo: Bloomberg

Comments as more analysts are lowering China’s growth forecasts as the blockade of COVID-19 has been extended in many large cities with clogged highways and ports, stranded workers and closed factories. Was sent.

China watchers say that due to stagnant activity, more stimulus will soon be needed if the government wants to reach its growth target of about 5.5% this year.

However, they say that room for policy relaxation can be limited by concerns that it could encourage capital outflows and inflation. In addition, traditional tools such as interest rate cuts can have limited impact if consumers and businesses remain locked down.

Last year, commodity, food and housing prices soared globally, and the Ukrainian War gained even more momentum in global inflation, threatening global economic recovery and financial stability.

“The international situation is full of uncertainty,” Yi said.

“Recently, geopolitical tensions have further boosted inflationary pressures around the world. China’s financial markets have not been affected by external shocks, and the domestic COVID-19 situation has further downward pressure on growth. I’m calling. “

While the People’s Bank of China has ensured price stability, stable grain production and energy supply ensure that China’s inflation this year remains within reasonable limits, Mr Yi said.

According to official data, consumer inflation has accelerated faster than expected, rising from 0.9% in February to 1.5% last month, but not as hot as in many other countries. The government has set an annual price target of about 3% this year.

In contrast to most major economies that have begun to tighten monetary policy to combat inflation, China has stepped up easing measures to mitigate the slowdown.

Last week, the People’s Bank of China announced that it would reduce the amount of cash that banks would have to hold as a third reserve in nine months. But Tuesday’s banks surprised many investors by not changing benchmark lending rates.

Analysts said the PBOC’s attention may also reflect concerns about the market impact of aggressive monetary tightening expected by the Federal Reserve Board in the coming months.

China’s stock market is the second poorest performing country in the world this year, after Russia, which has been hit by sanctions.

The IMF on Tuesday lowered China’s growth forecast this year to 4.4%, well below Beijing’s target, due to widespread blockades and supply chain disruptions.

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