The People's Bank of China said in its third-quarter monetary policy on Friday that t will keep liquidity reasonably ample and make its policy more flexible and pre-emptive. The People's Bank of China has pumped out a net 2.3 trillion yuan (US$330.68 billion) in liquidity this year by cutting banks' reserve requirements four times, after offsetting maturing medium-term lending facility loans. The weighted average lending rate for non-financial firms, a key indicator reflecting corporate funding costs, fell 0.03% in the third quarter to 5.94%, the central bank said, suggesting increased liquidity injections have gained some traction in lowering borrowing costs. The lending rate rose one basis point in the second quarter, following a rise of 22 basis points in the first quarter and a rise of 47 basis points in 2017. The central bank said it would encourage banks to lend more to private firms, which account for 60% of China's gross domestic product and 80% of urban jobs.
ECONOMIC NEWS: Producer inflation slows again on ebbing demandChina's factory-gate inflation slowed for the fourth month in October on cooling domestic demand and manufacturing activity, signaling China would likely roll out more growth-boosting measures in the face of trade frictions with the United States. Consumer prices, meanwhile, increased at the same pace in October from the previous month with food prices stable, official data from National Bureau of Statistics (NBS) showed Friday. The consumer price index (CPI) rose 2.5% in October from a year earlier, same as September's rate. The producer price index (PPI), a measure of the prices businesses receive for their goods and services, rose 3.3% in October from a year earlier, easing from 3.6% in September, the statistics bureau said. On a month-to-month basis, the PPI increased 0.4%.
OFFSHORE MARKET NEWS: US stocks closed in negative territory on Friday, reflecting renewed concerns about the outlook for interest rates on the heels of the Federal Reserve's monetary policy announcement on Thursday. Adding to the concerns about interest rates, the Labor Department released a report showing a much bigger than expected increase in producer prices in the month of October. The Dow Jones Industrial Average fell 201.92 points, or 0.77%, to 25,989.3, the S&P 500 lost 25.82 points, or 0.92%, to 2,781.01 and the Nasdaq Composite dropped 123.98 points, or 1.65%, to 7,406.90.
European shares dipped on Friday as mining and oil stocks sold off. The French CAC 40 Index and the U.K.'s FTSE 100 Index both fell by 0.5%, while the German DAX Index bucked the downtrend and closed just above the unchanged line.
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