Bank lending, money supply and - in a broader context - total social financing will maintain a proper growth pace to cope with GDP growth, they suggested.
PBOC's targeted liquidity support to certain institutions for special objective use - such as providing long-term cheap funds to the China Development Bank to finance subsidised housing - has edged towards bankrolling projects favoured by the government.
The People's Bank of China has made a decision to ease the reserve requirement ratio criteria for small and micro-sized enterprises, in hopes of boosting lending to these companies, The Economic Observer reported. "As a result, tight financial regulation and control of the real-estate sector is necessary".
The central bank's announcement came just hours after Premier Li Keqiang promised to cut the RRR and lower taxes and fees to help the country's small and private firms.
In addition, the medium-term lending facility that will mature in the first quarter of 2019 will not be continued.
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"The People's Bank of China (PBoC) will inject a significant amount of cheap funds to plug the liquidity hole", said Ming Ming, Citic's head of fixed-income research.
"The old playbook of China's economy seems to be back", said Shao Yu, chief economist at Orient Securities in Shanghai. Other factors, including banks' capital base and the volume of high-quality credit demand, are also important in influencing the credit growth pace in China.
Beijing will also step up "countercyclical adjustments" of macro policies and further cut taxes and fees, Li said, largely reiterating previous policy pledges. At the Central Economic Work Conference in December, Chinese leaders indicated their intention to enact further monetary easing measures.
The monetary policy transmission mechanisms will be further smoothed out while the proportion of direct financing will be increased to make financing more accessible and affordable for the private sector and small businesses, according to a statement issued after the meeting.
The cuts will be effective January 15 and January 25, and come ahead of the long Lunar New Year celebrations when cash conditions often get tight.
This will allow banks to lend more capital to enterprises now classed as small businesses, and therefore free up more reserves from the central bank, with estimates ranging from 400 billion yuan to as much as 700 billion yuan. Visit MarketWatch.com for more information on this news.