China's central bank has pledged to roll out additional policy support in a timely manner but refrained from offering more details, adding to expectations that no major easing is to come.
In a quarterly monetary policy report published Wednesday, the People's Bank of China said it will fully leverage existing policies, promptly introduce practical and effective new policies, and intensify countercyclical adjustments.
Despite the ramped-up easing rhetoric, economists say the central bank echoes last month's Politburo meeting, where Chinese leadership showed little appetite for any big-bang stimulus measures despite sputtering growth momentum.
"The PBoC followed the Politburo in its policy guidance without specifying explicit policy tools for deployment," said Citi economists.
The Chinese central bank pointed to fiscal implementation as an important source of support in the second half, Goldman Sachs economists said in a note. That supports the investment bank's baseline projection of no cuts to the policy rate or the amount of cash banks must hold as reserves.
"Broad-based monetary easing is more likely to come later, if growth weakens further or fiscal support proves insufficient," GS economists told clients.
The PBOC said Wednesday that it will step up support to boost domestic demand and channel more financial resources to technological innovation and China's smaller companies.
Citi economists see the PBOC report indicating a preference for reforms to its toolkit rather than an outright cut to rates.
The PBOC pledged to conduct overnight reverse repo operations more frequently, aiming to manage short-term interest rates with greater precision.
The central bank also sought to play down the importance of loans as a financing metric, advising instead that loans and bond financing be evaluated collectively.
Capital-intensive industries such as real estate and infrastructure have undergone adjustments in recent years, while emerging "new productive forces" tend to be more asset-light, according to the PBOC. That's resulted in a decline in traditional loan demand, it said.
Meanwhile, alternative funding channels--notably bonds and equities--are growing in importance. The PBOC noted in its report that technology companies, which exhibit distinct risk-return profiles across various stages of growth, require diversified lifecycle financing.
On global monetary policy, the PBOC forecasts relatively mild adjustments in major economies and thus less-severe shocks to the global economy. It said the severity of the current energy shock is moderating, alleviating the need for aggressive interest rate hikes.
Further, the current recalibration of monetary policy by central banks around the world doesn't represent a "drastic U-turn," the PBOC said. Historical precedent suggests that a rapid tightening cycle immediately following a period of massive monetary easing typically exerts a far more pronounced shock on financial markets, it added.