(Yicai) Aug. 4 -- China’s central bank will make a broad evaluation of the reserve requirement ratio policy for commercial banks to ensure reasonable and sufficient liquidity within the banking system, according to the head of its monetary policy department.

An RRR cut, open market operations, medium-term lending facilities, and various structural monetary policy tools all have the effect of releasing liquidity, which needs to be coordinated and used flexibly, Zou Lan said today when asked whether the People's Bank of China still has room to cut the reserve requirement ratio and interest rates.

August and September are the peak months for issuing local government bonds, Zhang Xu, a fixed-income analyst at Everbright Securities, told Yicai. An cut to the RRR during this period could provide a positive liquidity environment for bond sales, Zhang pointed out.

Regarding interest rate policy, Zou said that the PBOC will also consider the balance between growth and risk, the internal and external environments, and reasonably control the level of interest rates according to the economic and financial situation and macro-control needs.

The corporate loan rate has fallen in recent years, resulting in noticeable positive effects on businesses, Zou added. The PBOC will continue to use the benchmark loan prime rate to guide banks to adjust interest rates on existing personal mortgages in an orderly and lawful manner, he noted.

The central bank will also go on supporting the market-oriented adjustment of deposit interest rates to help banks reasonably control their liability costs, according to Zou. This will enhance the financial industry's ability to support the real economy, he added.

Editors: Tang Shihua, Martin Kadiev