Central bank reiterates prudent, neutral monetary policy

China's central bank reiterated Friday in a quarterly report that it will implement a prudent and neutral monetary policy while keeping liquidity basically stable.

The People's Bank of China (PBOC) said it will work to strike a better balance between stabilizing growth, adjusting structure, curbing asset bubbles and preventing risks, so as to provide a "neutral and moderate" monetary environment for supply-side structural reform.

"The need to balance multiple targets has made monetary policy more difficult," the PBOC said in the report for the fourth quarter of 2016.

China is mainly facing structural contradictions and development pattern issues, it said, adding that in the process of economic structural adjustment, monetary policy should generally be kept prudent and stable.

The bank will also work to boost financial efficiency and provide better support for the real economy while guarding against systemic risks, said the report.

The PBOC also called for attention to rising inflation expectations as domestic economic fundamentals have stabilized and improved.

China's consumer price index grew 2.5 percent year on year last month, while the producer price index jumped 6.9 percent from a year ago, official data showed.

Top officials at the annual Central Economic Work Conference in December decided that China would maintain a "prudent and neutral" monetary policy in 2017.

The central bank also called for guarding against speculation and unreasonable leveraging, and preventing capitals from flowing out of the real economy, especially restricting credit from speculative real estate purchases.

In a separate statement on financial market regulation Friday, the PBOC said it will enhance the prudent macro-management on real estate financing, citing Pan Gongsheng, vice governor of the bank.

To ensure the long-term stability and development of the financial market, the central bank will also prevent and address the risks in the bond market and the online finance market, said Pan.