Wednesday , July 18 2018

PBOC to use tools ‘comprehensively’ as trade war with US sparks sell-off

Bloomberg

China’s central bank called for investors to remain calm and pledged to use monetary policy “comprehensively,” after an escalation of the stand-off with US sent the nation’s benchmark stock index plunging.
The People’s Bank of China Governor, Yi Gang, said in an interview with the Shanghai Securities News published on the central bank’s website that policy makers are prepared for outside shocks and that investors should take a rational view. The Shanghai Composite Index earlier slid 3.8 percent, falling below
the 3,000 level previou-
sly breached during market crashes in 2015 and 2016.
“We’ll be forward-looking, prepare relevant policies, and comprehensively use all kinds of monetary policy tools,” Yi said. Stock market turbulence is “mostly driven by sentiment,” he said, adding that China has “room to face all sorts of trade friction.”
President Donald Trump earlier threatened to impose further tariffs on $200 billion of China’s exports, a rapid escalation of the two nations’ trade conflict. The PBOC had already injected another 200 billion yuan ($31 billion) into the economy via its medium-term lending facility. Combined with the funds it added earlier this month, that’s a net injection of 403.5 billion yuan so far in June, the most in any month since December 2016.
Those additional funds come after a statement which said the central bank will handle the “pace and intensity” of an ongoing campaign to reduce leverage in the economy, indicating that some leeway exists for policy tweaks as required. It also said the central bank had set up a global financial risk team to closely monitor any external and
domestic risks.

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