2 Minutes by Reuters Staff FILE PHOTO: The People’s Bank of China (PBOC), the country’s central bank, is seen in Beijing, China, on September 28, 2018. Jason Lee/Jason Lee/Jason Lee/Jason Lee/Jason Lee/ BEIJING, China (Reuters) – In the second half of the year, China would base the pace and intensity of monetary policy on domestic economic and inflation indicators, a central bank official said on Tuesday, following an unexpected decrease in bank reserves to help the economy recover. Sun Guofeng, the chairman of the People’s Bank of China’s (PBOC) monetary policy department, said China’s policy will prioritize stability and focus on local conditions, adding that any Fed tightening would have a limited impact on China’s monetary policy. “It’s normal for the US and China to have separate monetary policy operations,” Sun explained. “China’s conservative monetary policy stance has not changed.” The People’s Bank of China (PBOC) stated on Friday that it would reduce the amount of cash banks must retain as reserves, releasing about 1 trillion yuan ($154.67 billion) in long-term liquidity to support the country’s slowing post-COVID economic recovery. The RRR was last trimmed by the PBOC in April of last year, when the Chinese economy was still reeling from the coronavirus outbreak. Small businesses are feeling the brunt of recent raw material price increases since they are unable to pass on the increased costs to customers. According to Sun, the producer pricing index (PPI), which is currently near its highest level in more than a decade, would likely remain higher in the third quarter before declining in the fourth quarter and next year. (1 yuan = 6.4648 yuan) Shen Yan, Stella Qiu, and Ryan Woo contributed reporting, and Louise Heavens and Jacqueline Wong edited the piece./n
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