Reuters:

My question is for Mr. Yi. With an increasing downward pressure on the economy, is the PBOC considering making further cuts to interest rates and the required reserve ratios? Or will it maintain economic stability by devaluing the RMB to some extent? Do you think the policy space will be restrained by debts, property risks or inflation expectations? Thank you.

Yi Gang:

At present, the world economy is indeed facing downward pressure. So is the Chinese economy, if you look at the recent economic statistics. However, on the whole, the Chinese economy is operating within its proper range. Moreover, there is ample policy space for China's macro-economy policies, especially its fiscal and monetary policies, when addressing the downward pressure. Take the monetary policy as an example. The interest rates remain at an appropriate level. And the current required reserve ratio has left ample space for possible adjustments of macro policies in the future.

Yi Gang:

But I want to stress that the PBOC, unlike the central banks in some other countries, is not eager to make large cuts in interest rates or adopt quantitative easing policies. Our judgement is that we should stay focused and adopt a prudent monetary policy. An objective analysis also shows that we still have ample space to use monetary policy instruments as well as macroprudential policy instruments. There are concerns that if the world economy did move downward, major developed countries might use up all their monetary policy instruments–adopting a zero-interest or even negative interest policy. In my opinion, we should cherish the normal monetary policy space during our operations and keep normal monetary policy as long as possible. That will contribute to sustainable economic development and benefit the people. Thank you.

Chairperson:

Thanks again to the three speakers. We will hold another press conference at 3 p.m. to introduce this year's military parade. We welcome all of you to attend it. That's all for this conference. Thank you.

Translated and edited by Chen Xia, Zhang Jiaqi, Yuan Fang, Li Jingrong, Gong Yingchun, Li Xiao, Zhang Rui, Li Huiru, Mi Xingang, Guo Yiming, Huang Shan, Zhang Junmian, Wang Zhiyong, Wang Qian, Wang Yanfang, Yang Xi, Guo Xiaohong, Kenneth Teh Chiu Soong. In case of any dispute over a discrepancy, the Chinese version is deemed to prevail.