Impact on capital flows must be considered when adjusting RRR – PBOC’s Ma

FXStreet (Mumbai) - Ma Jun, chief economist at the research bureau under the PBOC, was on the wires via Financial News over the last hours, and commented on the central bank’s monetary policy.

Ma noted, “Excessively large or frequent cuts in banks' deposit reserve ratios could lead to large drops in domestic short-term rates and encourage capital outflows, which would offset easing efforts.”

“The use of quantitative policy tools should not be aimed at directly affecting the economy but as tools to achieve the desired policy rate level,” he concluded.