(Yicai Global) April 15 -- China’s central bank will use its monetary policy tools, including cuts to the reserve requirement ratio for lenders, to amplify support for the real economy, especially for small and mid-sized businesses in sectors severely hit by the pandemic, according to an official.

The People's Bank of China will adjust the strength and implementation speed of its prudent monetary policy based on the country’s economic circumstances, Sun Guofeng, director of the PBOC’s monetary policy department, said at a press conference yesterday.

China began relaxing monetary policy late last year, and further easing is expected after the cabinet this week said there will be timely cuts in the RRR, freeing up more funds for commercial banks to lend, and other policy tools to support the economy, which is grappling with a resurgence of Covid-19 and restrictions to stop it spreading.

The PBOC also will enhance the flexibility of the yuan's exchange rate, Sun added, enabling it to play a role in adjusting the economy and stabilizing the balance of payments. The central bank will maintain the exchange rate at a reasonable and balanced level, he added.

The pace of credit expansion is increasing, according to PBOC spokesman Ruan Jianhong, as new yuan loans jumped to a record high of CNY8.34 trillion (USD1.31 trillion) in the first quarter. And interest rates are declining steadily as the loan prime rate reform takes effect, he added.

Last month, the interest rate on new corporate loans was 4.37 percent, eight basis points lower than in December.

Additionally, mortgage rates are coming down. Banks in more than 100 cities have cut home loan rates since last month, ranging from 20 to 60 basis points on average, according to Zou Lan, director of the PBOC’s financial markets department. The cuts have occurred mainly at the bank level, he said.

Editor: Emmi Laine, Xiao Yi