A CHINESE-LANGUAGE newspaper warned the market against “simplistic” interpretations of monetary policy moves as easing expectations gathered steam.

Expectations the central bank will ease policy have sharply risen after Premier Li Keqiang said Friday that the amount of cash that banks must keep as reserves will be reduced “in a timely way.”

“This is a rather simplistic interpretation of macro policy, which could easily lead to misunderstandings,” the Economics Daily said in a commentary yesterday.

China’s monetary policy will be more focused on its continuity and stability while taking into account the government’s short-term and long-term goals, according to the commentary.

But the financial daily ruled out the possibility of a flood of stimulus to prop up the economy, saying China would make its policies more targeted to cope with any downward pressure.

It added that coordination between monetary policy, fiscal policy and industrial policies will be stepped up.

Premier Li said during a video meeting with Kristalina Georgieva, managing director of the International Monetary Fund (IMF), that China will cut the reserve requirement ratio (RRR) for banks at an appropriate time to strengthen support for the real economy, especially for small- and medium-sized enterprises.

A lower RRR means banks do not need to keep as much cash in their reserves, which gives them more money that can be loaned to companies. The RRR for large banks, after taking into consideration the preferential policy of targeted cuts for inclusive financing, is at 10.5 percent.

(SD-Agencies)