China's central bank pledges to step up policy support for slowing economy

© Reuters. FILE PHOTO: A man wearing a mask walks past the headquarters of the People's Bank of China, the central bank, in Beijing, China, as the country is hit by an outbreak of the new coronavirus, February 3, 2020. REUTERS/Jason Lee

BEIJING (Reuters) - China's central bank said on Monday it would step up support for the slowing economy, while closely watching domestic inflation and monitoring policy adjustments by developed economies.

The People's Bank of China (PBOC) will keep liquidity reasonably ample, prioritise stability and take steps to boost confidence, the bank said in its first-quarter monetary policy implementation report.

"Recently, the COVID-19 and the Ukraine crisis have led to increased risks and challenges, and the complexity, severity and uncertainty of China's economic development environment have increased," the central bank said.

But China still has favourable conditions to develop its economy over the long term thanks to its big market potentials and ample room for manoeuvre, it said.

China will keep its economic operations within reasonable ranges, the central bank said, adding it would not resort to flood-like stimulus.

The central bank will support housing demand and step up support for housing leases, it said, reiterating it would not use property as short-term stimulus for the economy.

China will keep its macro leverage ratio basically stable and also keep the yuan exchange rate essentially stable, the central bank.

The economy has taken a hit from efforts to contain the spread of record COVID-19 cases, which have led to a full or partial lockdown in dozens of Chinese cities, led by a city-wide shutdown in the economic and financial hub of Shanghai.

The PBOC cut the amount of cash that banks must hold as reserves last month and more modest easing steps are expected.

China will take steps to support its economy as risks grow from its COVID-19 outbreaks and conflict in Ukraine, a top decision-making body of the ruling Communist Party said last month.