PBoC stays neutral and prudent – UOB

Suan Teck Kin, CFA at Global Economics & Markets Research at UOB Group, assessed the recent stance from the PBoC following its Second Quarter Monetary Policy Implementation Report (August 11).

Key Quotes

“PBoC extended its “neutral and prudent” policy stance while keeping the focus on managing and preventing systemic risks”.

“While credit creation remained steady and PBoC keeping liquidity stable, loan interest rates have moved higher in 2Q and are likely to bias higher in the months ahead”.

“The central bank also focused on market determination of the RMB and recent refinement in RMB fixing methodology, which is consistent with our expectation of widening of the daily trading bands in the months ahead”.