China cbank to sta­bi­lize mar­ket ex­pec­ta­tions

The Pak Banker - - COMPANIES/BOSS -

China's cen­tral bank promised to "sta­bi­lize fi­nan­cial mar­ket ex­pec­ta­tions" on Tues­day, say­ing it will head off risks in the latest show of of­fi­cial re­solve to keep the econ­omy on an even keel. With­out re­fer­ring to the shake­out in China's stock mar­ket which has slumped about a quar­ter since early June, the Peo­ple's Bank of China (PBOC) said it would im­prove its warn­ing sys­tem for risk.

Author­i­ties would "pay at­ten­tion to sta­bi­liz­ing fi­nan­cial mar­ket ex­pec­ta­tions", the cen­tral bank said in an online state­ment af­ter Gover­nor Zhou Xiaochuan met the heads of the bank's pro­vin­cial of­fices. It was not im­me­di­ately clear whose ex­pec­ta­tions it wants to sta­bi­lize or how it would do it, but the com­ment fol­lows the slump in the mar­ket and dras­tic mea­sures to stop the sell-off. The cen­tral bank would use var­i­ous pol­icy tools flex­i­bly to sus­tain ap­pro­pri­ate growth in liq­uid­ity and credit and keep pol­icy "pru­dent", the state­ment said.

The PBOC would also aim to lower bor­row­ing costs for firms and sup­port key ar­eas and vul­ner­a­ble sec­tors, while keep­ing the yuan <CNY=CFXS> "ba­si­cally sta­ble" as it tries to re­fine the ex­change rate sys­tem. Chi­nese shares were seized by a vi­cious sell-off in June and July af­ter spec­u­la­tion that the cen­tral bank had ended its mon­e­tary pol­icy eas­ing spurred in­vestors to dump their stocks.

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