China is considering measures to drive adjustments in financial institutions' lending rates for companies to improve credit flow into the economy, the official English-language China Daily reported on Thursday, citing a central bank official.
Sun Guofeng, head of the People's Bank of China's monetary policy department, said that despite rising expectations of a central bank interest rate cut, it is "more urgent" to allow financial markets, rather than the PBOC, to determine lending rates.
Policymakers should assess domestic macroeconomic conditions to reduce financing costs before pursuing more interest rate reform, the paper said.
"We hope (policy fine-tuning) will not surprise the market when it is introduced," it quoted Sun as saying.
"The PBOC has good communication mechanisms with other central banks including the U.S. Federal Reserve and the European Central Bank," Sun said, noting that communication with other countries is needed before introducing new policies or "creative monetary policy tools."
Chinese authorities have struggled to increase lending to try to boost China's slowing economy, which has been hit by weak domestic demand and the trade war with the United States. But they have shied away from aggressive easing, including benchmark interest rate cuts, amid concern that doing so could put pressure on China's yuan.
In 2018, China's economy grew 6.6 percent, its slowest pace in 28 years, weighed down by weak investment and faltering consumer confidence. Growth is expected to slow further to 6.3 percent this year.
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