A senior central bank official said that there is still much room for further adjustment of the monetary policy, particularly more cuts in bank reserve requirement.

People's Daily reported today that Su Ning, Deputy Governor of the People's Bank of China, does not agree with the argument that there would be limited room for further adjustment to China's monetary policy. This is due to the sufficient liquidity in China's banking system and China's approximate interest rate to the nearly zero interest rate in the US.

Su Ning pointed out the bank reserve ratio, currently standing at 13 percent to 15 percent, makes further downsizing possible in case of insufficient market liquidity.

More interest rate cuts will be more difficult, but still possible. The central bank has reduced the one-year benchmark interest rate for loans by 216 basis points to 5.31 percent. While cutting that of deposits by 189 basis points to 2.25 percent after it had cut interest rates five times since September last year.

The central bank will make decisions on monetary policies according to the market condition, said Su.

"In a word, the People's Bank of China has enough tools to adopt a moderate policy to ensure that the money supply meets the needs of the economic growth," he concluded.

By People's Daily Online