A CHINESE central bank official called yesterday for stepped-up global policy coordination to manage the economic impact of the COVID-19 outbreak, and said China’s recent policy measures were gaining traction while it had capacity for further action.

Chen Yulu, a deputy governor at the People’s Bank of China (PBOC), also told a news conference that PBOC Governor Yi Gang had exchanged views with U.S. Federal Reserve Chairman Jerome Powell, the International Monetary Fund and other agencies.

“The global epidemic is spreading rapidly. It’s urgent for all countries to strengthen international coordination in macro policies such as public health policy, trade policy, fiscal and monetary policy,” Chen said.

“We will actively participate in international cooperation in response to challenges posed by the complex situation.”

Chen said that while downward pressure on the global economy is increasing as the virus rattles financial markets, he said he expects significant improvement in the Chinese economy in the second quarter.

“At present, the operation of China’s financial market is generally stable, market expectations are relatively stable and the space for macro policies and tool reserves are sufficient,” Chen said.

The PBOC will keep liquidity reasonably ample, keep growth of M2 money supply and total social financing in line with nominal gross domestic product (GDP) growth and aim for slightly higher credit rise, Chen added.

The PBOC has already rolled out a raft of measures, including cutting lending rates and banks’ reserve ratios, and doling out cheap loans for selected firms, to cushion the blow to the economy from the COVID-19 outbreak.

China is widely expected to see its economy contract in the first quarter due to efforts to contain the spread of the disease.

While the COVID-19 is expected to continue exerting upward pressure on China’s consumer prices in the near term, inflation could ease in the coming quarters, he said.

Chen also said he expects China’s yuan currency to remain stable around 7 to the U.S. dollar in the near term, due in part to ample foreign exchange reserves. (SD-Agencies)