China Explores Further Monetary Easing for Economic Stability

China's central bank is considering further cuts to the reserve requirement ratio, currently averaging 6.6%. This strategy is part of broader fiscal measures, including increased debt issuance and interest rate cuts, aimed at ensuring stable economic growth. The PBOC is also maturing its approach towards bond market interventions.

China's central bank has indicated potential for additional reductions in the reserve requirement ratio, which currently averages 6.6%, according to a statement from a central bank official on state broadcaster CCTV.

This announcement comes as China reveals plans to increase the budget deficit, issue more debt, and loosen its monetary policy framework to stabilize economic growth. The People's Bank of China has been actively reducing interest rates and injecting liquidity throughout the year to meet its growth target of approximately 5%.

Interest rate adjustments are vital to guiding a gradual decline in overall social financing costs, according to Wang Xin, director of the PBOC's research bureau, who discussed strategies for the next phase of the country's monetary policy. Wang emphasized that as the PBOC's proficiency in secondary market bond transactions grows, the central bank should employ a variety of monetary tools to ensure adequate medium and long-term liquidity in the banking system.

(With inputs from agencies.)