BEIJING (Reuters) – China’s cabinet has amended rules for the central bank’s monetary policy committee to strengthen the Communist Party’s leadership over key policy issues, the official Xinhua News Agency reported on Thursday.
China has in recent months launched a sweeping regulatory overhaul to tighten the party’s grip on the sprawling financial sector, amid an anti-graft campaign.
The policy committee must “adhere to the leadership of the Communist Party of China, improve the modern monetary policy framework and report important matters to the Party’s Central Committee and the State Council,” Xinhua reported, citing the new rules issued by the State Council, or cabinet.
The policy committee of the People’s Bank of China (PBOC) meets once every quarter to discuss economic and policy issues and recommends any changes or action when necessary, but its influence is limited.
The PBOC, whose regulatory powers have been eroded in the shake-up, lacks the independence of institutions such as the U.S. Federal Reserve and needs cabinet approval on key changes in interest rates and the value of the yuan.
The central bank should beef up its efforts to guide market expectations, according to the new rules, effective from Thursday.
Analysts expect the central bank to roll out fresh easing steps in the coming weeks to support the economy amid a feeble recovery.
(Reporting by Beijing newsroom and Kevin Yao; editing by Christina Fincher and Emelia Sithole-Matarise)