2018.05.1401:20:00UTC+00​China Central Bank to Retain Neutral Policy, to Keep Stabilizing Yuan

China's central bank will retain its neutral monetary policy and maintain liquidity and credit growth mostly stable while keeping the yuan currency fundamentally stable, the PBOC said on Friday.

The central bank's unexpected reduction in reserve requirement ratios on April 17 and increasing worries regarding a trade war with the U.S. has stoked market expectations of looser policy to back the economy.

The People's Bank of China will stem systematic risks and utilize multiple monetary policy tools to ensure financial stability in the world's second biggest economy, it said in its first-quarter monetary policy implementation report.

The PBOC will find a balance between stabilizing economic expansion, advocating structural changes and curbing risks, it said. The central bank pointed out that at one point, it is important to manage the liquidity scale to aid in deleveraging and preventing financial risks. But on the other hand, it said that it is necessary to comprehensively mull changes in the macroeconomic conditions and boost policy coordination.

The central bank reaffirmed that it will keep the yuan basically stable while boosting the currency's two-way fluctuations and increasing the implementation of market-based currency reform measures.

The weighted average lending rate for non-financial companies increased 22 basis points in the first quarter to 5.96 percent, after a 2 basis points drop in the prior quarter.