PBoC points to gradual exit from monetary stimulus policies

The People’s Bank of China (PBoC) said in its quarterly monetary policy report that it will “gradually guide monetary conditions back to normal levels from the counter-crisis mode,” Bloomberg reported. This indication of a staged exit from monetary stimulus policies comes after January’s economic data showed a surge in bank lending and property prices while inflation moderated slightly. The PBoC said it would consider “the need for economic growth, changes in inflation, and domestic and global liquidity” when restoring monetary conditions to normal. It emphasized the need for a global coordination of stimulus exits, warning that the major risks include a reversal of capital inflows triggered by an unwinding of stimulus policies in major developing economies. As a result, “global asset prices, especially asset prices in emerging markets, may see volatilities,” the report said. The bank said it would allow reasonable credit growth in 2010 with “interest rates to play a role in adjustments” alongside other monetary policy tools. The renminbi will be kept “basically stable.”