According to Sheng Songcheng, an adviser to the People's Bank of China (NBK), the country's authorities do not plan to resort to large-scale monetary policy incentives in the coming year. At the same time, the possibility of reducing reserve requirements for commercial banks in case of need is not excluded, the official said.
The representative of the NBK believes that next year, the Chinese economy will face downward pressure, and its growth rates will stabilize. S. Songchen drew attention to the high probability of further reductions in the required reserve ratio of banks (RRR). At the same time, a representative of the regulator does not recommend conducting a large-scale reduction in interest rates.
Recall that from October 15, 2018, the People's Bank of China reduced reserve requirements (RRR) for most banks by 1%. This decrease in RRR is the fourth in a row in the outgoing year.
According to Du Feilun, director of the Economic Research Institute of the National Development and Reform Commission (NDRC), in 2019, the Middle Kingdom's economy should grow by 6-6.5%. He believes that the reason for this will be a moderately soft economic policy in the country. According to expert estimates, in this situation, the potential for adjusting monetary policy is ensured by steady inflation in consumer prices.
In the coming year, the Chinese authorities plan to pursue a proactive fiscal policy, while the state budget deficit may increase to 3% from the current 2.6%, said S. Songcheng. According to the adviser of the central bank, in relation to exchange rates, the Chinese government should keep the national currency from falling below the key mark of seven yuan per US dollar. "The key threshold of seven yuan per dollar is very important. If the national currency is below this important mark, the cost of stabilizing the exchange rate will be greater," concludes S. Songcheng.
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