A view of the PBC building in Beijing Photo: VCG

China's central bank said on Sunday it will make prudent monetary policy more "flexible", which financial experts read as a sign that the People's Bank of China (PBC) might be bolder in loosening monetary policies, including lower interest rates and reserve requirement ratio cuts (RRR), to support the economy. 

In its first-quarter monetary policy implementation report, the People's Bank of China (PBC) saidit will readjust the focus and pace of (its monetary policy) according to the courses of coronavirus control as well as general economic performance.

The bank said that it would step up counter-cyclical adjustments to better support recovery of the real economy, while make sure that there's reasonably adequate liquidity in the market to help micro enterprises weather the public health crisis. 

Plans of reform were also disclosed. For example, the PBC said it will further deepen reforms of the loan prime rate (LPR) to guide down market loaning rates. It would also push market-oriented reforms on the yuan's exchange rate to keep the renminbi's exchange rate flexible. 

Zhao Qingming, a veteran financial expert, said that a more "flexible" monetary policy means that the PBC may, promptly, roll outnew monetary stimulus, instead of always waiting for economic statistics to make decisions, and that its policies will be stronger in "strength".

According to Zhao, up to now China has been more reliant on fiscal policies to fend off a economic slump, while the strength of monetary policies is restrained. 

"This year, China has cut the LPR by 30 basis points. This, plus the several RRR cuts and targeted refinancing, has been too weak compared with fiscal policies like more than 700 billion yuan ($99 billion) of tax cuts and a rollout of large-scale local government bonds, or with US Federal Reserve's interest rate cuts of 150 bp in two weeks," Zhao told the Global Times.

He stressed that at a time when China faces the biggest economic tremor after 1997, monetary policies should play a more decisive role in propping up the economy. He also predicted the PBC would again cut interest rates.