CHINA’S central bank has no intent to tighten or relax monetary policy, a vice governor said Thursday, as the market debates how much more support the government will give the economy after surprisingly resilient data were released last week.

The People’s Bank of China’s use of reverse repos or a medium-term lending facility does not signal that it has a loosening bias, Vice-Governor Liu Guoqiang told reporters at a briefing.

On the contrary, said Liu, if the central bank has not conducted reverse repos for a few days, it does not mean monetary policy is about to tighten. Those tools are designed to adjust short-term liquidity, he added.

Financial market views over China’s policy outlook have shifted markedly since the release of better-than-expected first-quarter gross domestic product and March economic data, which suggested the economy may be starting to steady after a flurry of earlier growth-boosting measures.

Following signs of improvement in the economy, policy insiders said that the central bank is likely to pause to assess conditions before making any further moves to cut bank reserve requirements.

Liu said the prudent monetary policy remains neither too tight nor too loose, and the People’s Bank of China does not want to see a liquidity crunch nor a market awash with cash.

Although the central bank’s easing bias remains unchanged, it sees less room this year for cutting reserve requirement ratios as fiscal stimulus plays a bigger role in spurring growth, according to government advisers.

Fears of less stimulus have triggered a reversal in the country’s rallying stock markets, which are highly sensitive to liquidity changes.

Liu said a recent meeting which stated that monetary policy should be fine-tuned based on economic growth and price changes did not ask to alter the direction of the policy. (SD-Agencies)