What does PBoC do?

Remember this about the People’s Bank of China:

Lacking the degree of independence enjoyed by foreign peers, the PBOC advises on policy, manages money market operations, and takes instruction on policy moves from the State Council, the nation’s cabinet….

……. The annual money supply target, interest rate and exchange rate decisions must be approved by the State Council. [Link]

Somewhat unrelated to this and somewhat related to this news above is the news that PBoC asked banks to keep the ceiling on the deposit rate at the previous level of 3.25% (which was 130% of the benchmark deposit rate of 2.5%) and not at 3.375% (which is the ceiling at 150% of the benchmark deposit rate of 2.25%, after the rate cut on May 10).

Well, who said that managing an economic downturn in an economy used to growing at 9% to 12% will be easy?

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