CN: People's Bank of China

Mon Jul 03 19:00:00 CDT 2017

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Level 4.35 4.35

The People's Bank of China has published a statement on the quarterly meeting of its monetary policy committee, advising there has been no change to the overall policy stance. The PBOC's most important policy rate, the benchmark lending rate, remains at 4.35 percent. This rate is usually adjusted at unscheduled meetings but has been kept on hold at this level since October 2015.

Consistent with previous advice, the PBOC's statement notes that officials will continue to implement a "prudent and neutral" monetary policy, and keep liquidity in the country's financial system "basically stable". Since the start of the year officials have been active in adjusting other policy tools to minimise volatility in liquidity conditions. Officials also advised that they will seek to keep the domestic currency stable.

Preliminary estimates for economic growth in the three months to June are scheduled for release later in the month. Speaking last week, Chinese Premier Li Keqiang expressed confidence that the government's growth target for 2017 of 6.5 percent would be met.

The Peoples Bank of China (PBoC) is mainland China's central bank with the power to control monetary policy via interest rate moves. The PBoC also regulates financial institutions. The objective of the monetary policy is to maintain the stability of the value of the currency and thereby promote economic growth. The monetary policy instruments used by the PBoC include reserve requirement ratio, central bank base interest rate, rediscounting, central bank lending, open market operation and other policy instruments specified by the State Council.

The PBoC sets interest rates for mainland China. Interest rates are always divisible by nine, instead of by 25 as in the rest of the world. The renminbi or yuan is the official currency of the Bank and is legal tender in mainland China, but not in Hong Kong and Macau.

The Bank goes back in various forms to 1948. In the 1980s, as part of economic reform, the commercial banking functions of the PBoC were split off into four independent but state-owned banks. In 1983, the State Council promulgated that the PBoC would function as the central bank of China.

Its central bank status was legally confirmed on March 18, 1995 by the 3rd Plenum of the 8th National People's Congress. In 1998, the PBoC underwent a major restructuring. All provincial and local branches were abolished, and the PBoC opened nine regional branches, whose boundaries did not correspond to local administrative boundaries. In 2003, the Standing Committee of the Tenth National People's Congress approved an amendment law for strengthening the role of PBC in the making and implementation of monetary policy for safeguarding the overall financial stability and provision of financial services. The current governor is Zhou Xiaochuan.