PBOC assures monetary policy will deal with all challenges

China's central bank will take measures proactively and steadily to deal with the impact of adjustments made by developed economies to their monetary policies, strengthen the management of market expectations, and keep the yuan exchange rate basically stable at an appropriate and balanced level, an official said on Friday.

The People's Bank of China will get the intensity and pace of the prudent monetary policy right according to the domestic economic situation, increase the flexibility of the yuan exchange rate, and allow the exchange rate to play the role of an automatic stabilizer adjusting the macroeconomy and the balance of payments.

The central bank will also guide market entities to establish a risk-neutral concept and adopt strategies for hedging against currency volatility, said Xuan Changneng, deputy governor of the PBOC, at a news conference held by the State Council Information Office.

In recent months, the overall Chinese economy has maintained the momentum of recovery. The country has dynamically optimized its COVID-19 prevention and control measures. Prices have remained basically stable in China while the world is navigating high inflation. Considering that major economies' business climate indexes have declined, the growth of China's trade surplus may slow down to some extent. Because of a number of factors, the yuan exchange rate will remain stable in general, Xuan said.

The Chinese economy is resilient and large in size. Developed economies' monetary policy adjustments will have limited impact on China although the adjustments may have greater impact on smaller emerging market economies, he said.