The People’s Bank of China (PBC), the central bank, said on Monday that China's financial market is operating smoothly and has not been affected by US monetary policy.
The comment came after the US said it would maintain its loose monetary policy until at least the end of 2023, in a bid to support its economic recovery and labor market. The US Federal Reserve reiterated that it would keep its benchmark interest rate near zero and continue to pump liquidity into financial markets.
Affected by the market’s expectations of the US monetary policy situation, global financial markets, especially in some emerging economies, have experienced some volatility recently.
China’s financial market is operating steadily, the RMB exchange rate is floating in both directions, and China’s 10-year treasury bond yield has remained at around 3.2 percent, a decline from the previous period, and this indicates that China’s cross-border capital flows are generally balanced, said Sun Guofeng, head of the monetary policy department of the PBC.
During the period from February to April last year in response to the epidemic, China’s monetary policy was adjusted slightly. As China took the lead in controlling the epidemic, monetary policy operations have returned to normal.
Going forward, China will adhere to the normal monetary policy, but at the same time, attention will be paid to changes in the international economic and financial situation and the exchange rate will be flexible, Sun said.
China will gradually phase out tax and fee reduction policies that were launched last year to buffer against the COVID-19 epidemic, Assistant Finance Minister Ou Wenhan said on April 7.
The country is set to extend some policies such as value-added tax (VAT) relief for small-scale taxpayers to maintain necessary support for the economy's recovery, Ou told a press conference, but interim contingency policies concerning viral prevention and ensuring supply will be discontinued as they are due to expire.