HONG KONG (Reuters) - China’s central bank said on Friday it will help reduce borrowing costs for companies, especially small firms, as part of a wider effort to support the world’s second-largest economy amid a trade war with the United States.
The People’s Bank of China (PBOC), the central bank, said in its first-quarter implementation report that it would also maintain a prudent monetary policy and fend off any systemic financial risks.
The central bank said it would fine-tune its policy in line with changes in the economy and prices and work to improve its policy transmission mechanism.
“We will further reduce financing costs for the real economy especially small firms, and increase the ability and willingness of financial institutions to serve the real economy,” it said.
The PBOC has cut banks’ reserve requirement ratios (RRRs) six times since early 2018, including a targeted cut this month, to spur lending, and more policy easing is widely expected.
The weighted average lending rate for companies and home buyers edged up 5 basis points in the first quarter to 5.69 percent, the central bank said.
The lending rate fell 28 basis points in the fourth quarter, it said. The PBOC had previously issued a weighted average lending rate for non-financing firms.
China’s economy still faces downward pressure, the central bank, adding that it has ample policy tools to cope with domestic and external uncertainties.
The central bank also reiterated that it will keep the yuan stable.
Chinese economic growth cooled to 6.6 percent in 2018, high by international standards but a 28-year low for the country. Growth is expected to slow further this year before supportive measures announced in March start to kick in.
Reporting by Lee Chyen Yee in Singapore, Meg Shen in Hong Kong and Kevin Yao in Beijing; editing by Darren Schuettler and Hugh Lawson