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China to keep credit growth steady: Central bank

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China's central bank pledged on Sunday to use a mix of policy tools to adjust banking liquidity to ensure steady credit growth, in an apparent bid to soothe market concerns about tighter monetary conditions.

The central bank will "use a mix of price and quantitative policy tools to adjust liquidity in the banking system and guide steady and appropriate growth in money, credit and social financing", it said in a statement on its website.

The central bank allowed short-term inter-bank borrowing costs to spike to close to 30 percent on June 20, a blunt warning to overstretched lenders that they must bring risky lending under control.

(Read More: Will the Reprieve for China's Lenders Last?)

The cash crunch - caused by factors including fast credit growth, the regulatory deposit reserve requirement and a crackdown on hot money inflows - is abating after the central bank signaled its readiness to soothe market volatility.

The People's Bank of China, while affirming its prudent monetary policy, also said a temporary jump in short-term interest rates would not hurt the real economy.

(Read More: After Export Data, China's GDP Target Looking Wishful)

"Overall, liquidity in the banking system remains ample," it said. "The slower M2 growth in June was in line with the expected outcome of macro-economic adjustments and prudent monetary policy and was closer to the full-year target of 13 percent."

The central bank pledge came after data published on Friday showed the total social financing aggregate, a broad measure of liquidity conditions that includes bank loans and bond sales, fell to 1.04 trillion yuan in June.

Analysts say falling total social financing could reflect the government's crackdown on shadow banking, forcing banks to scale back their balance-sheet lending.

Annual growth of the broad M2 money supply also slowed to 14 percent in June, its slackest pace of expansion in six months.

China is set to release its second-quarter economic growth report on Monday, and analysts polled by Reuters expect growth to have slipped to 7.5 percent between April and June, from 7.7 percent in the first three months of the year.

(Read More: China could 'shock' markets with big GDP miss)

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