Central bank head suggests China maintain prudent monetary policy

By Tuba Ongun

ANKARA (AA) - People’s Bank of China Governor Yi Gang called for maintaining prudent monetary policy to support real economic advancement, local media reported on Friday.

“Maintaining positive interest rates is beneficial to providing positive incentives for the market, in line with the Chinese tradition of saving, and conducive to long-term social development,” Yi said in a recent article for the Journal of Economic Research before his expected retirement, as daily South China Morning Post reported.

The 65-year-old Yi is widely expected to step down soon as the central bank governor.

China’s potential economic growth rate’s remaining within a reasonable range will pave the way for the country to keep positive interest rates, Yi said.

He also underlined that China should avoid “helicopter money” or printing and distributing large sums of money to the public to trigger economic growth.

Yi said he would also like to see greater market-driven force and more flexibility in the yuan’s exchange rate regime, which could help China absorb external shocks, such as from aggressive US interest rate hikes.

“(The central bank) should fulfill the role of structural monetary policy tools and increase financial support for key areas and weak links in the national economy,” he said in the article.