China's central bank vows to further reduce interest rates

China's central bank vowed on Thursday to further reduce the market interest rates and push financial institutions to forgo 1.5 trillion yuan ($211 billion) in profit, to boost credit for the business sector and spur economic growth.

"In the second half of this year, the monetary policy is expected to maintain liquidity at a reasonably ample level. For the whole year, new yuan loans are expected to increase by 20 trillion yuan, and the growth of aggregate financing will exceed 30 trillion yuan," said Yi Gang, governor of the People's Bank of China, the central bank.

Financial institutions could sacrifice a part of their profits through interest rate cuts, the monetary policy tools to directly support credit, and the reduction of some service fees, Yi said at the 12th Lujiazui Forum.

The PBOC governor said to pay attention to the "side effects" of policies to cushion the novel coronavirus pandemic. "The total amount of the financial supportive measures should be appropriate, and good timing for an exit of these tools should be considered in advance."

He also mentioned that as an international financial hub, Shanghai can take a step further to free the usage of RMB and achieve the convertibility of capital accounts. "As long as regulatory requirements are met for anti-money laundering, anti-terrorist financing and anti-tax evasion, capital in normal trade and investment can freely float both in and out (of Shanghai)," Yi added.