ICYMI - People's Bank of China says will keep yuan FX rate basically stable

Overnight the PBOC issued its Q1 2021 Monetary Policy Implementation Report.

The Bank reiterated its recent messaging:

• said it would keep prudent monetary policy flexible, targeted and appropriate
• will keep liquidity reasonably ample
• will keep the yuan exchange rate basically stable

The report had commentary on inflation at the producer level., which surprised to the topside in data released yesterday:

• China inflation figures for April: CPI 0.9% y/y (vs. expected 1.0%) & PPI 6.8% y/y (expected 6.5%)

The PBOC said in the report:

• In Q2 and Q3 of this year global inflation and a low base effect could drive up China's producer price index (PPI)
• However, the annual increase in the PPI for 2020-2021 is expected to stay within a reasonable range