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China's central bank to add monetary policy tools

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China's central bank to add monetary policy tools

The People's Bank of China has indicated that it is likely to introduce new monetary tools as it maintains its "prudent and neutral" policy settings, Bloomberg News reported, citing the central bank's quarterly monetary policy implementation report released Aug. 11.

The central bank will add new maturities to its reverse repurchase agreements to keep liquidity in the financial system stable and neutral, and prevent "misrepresentation" of its policy, it said.

The PBOC is indicating that "it's going to add new operation tools in the near future," Ming Ming, head of fixed-income research at Citic Securities Co. in Beijing and a former PBOC official, wrote in a note Aug. 12, according to Bloomberg.

Funding levels will likely become more stable in the second half given the new tenors, Ming added.

The central bank said it will ramp up coordination efforts on financial regulation and improve its quarterly macroprudential assessments of banks, Reuters reported.

The central bank also said it would maintain the Chinese yuan within a balanced range and enhance the market-based exchange rate regime.