(Corrects attribution in paragraph 4 to Yuan Da of the NDRC, not Zou Lan of the central bank)
BEIJING (Reuters) -China's central bank will flexibly use policy tools to ensure reasonably ample liquidity in the banking system, an official said at a news conference on Friday, as investors looked for more signs of Beijing's resolve to bolster a faltering economy.
The news conference convened by the National Development and Reform Commission was the third this week, following pledges given during a meeting of the ruling Communist Party's Politburo on July 24 to do more to support the economy.
"The reserve requirement ratio (RRR) cuts, open market operations and medium-term lending facilities (MLF) and other structural monetary policy tools... need to be coordinated and flexibly used," Zou Lan, head of the monetary policy department at the People's Bank of China (PBOC), said.
Policymakers would continue "to plan and study a batch of more targeted and stronger reserve policies" that can be promptly used when needed, Yuan Da, director of the department of national economy at the NDRC, added.
The lack of details on plans for more stimulus during the state planner's two earlier news conferences had left investors disappointed, resulting in China and Hong Kong stocks pulling back on Wednesday, losing more of the gains made after the Politburo meeting.
Stocks rose slightly on Friday, on anticipation that the latest news conference would give stronger reassurance of Beijing's resolve.
The world's second-largest economy grew at a frail pace in the second quarter as demand weakened at home and abroad, raising pressure on policymakers to deliver more stimulus to shore up the post-pandemic recovery.
The central bank cut the RRR - the amount of cash that banks must hold as reserves - in March and cut its benchmark lending rates by a modest 10 basis points in June, the first such reduction in 10 months.
Zou said the PBOC would guide banks to effectively adjust interest rates on existing mortgages, and it would also support banks to reasonably control the cost of liabilities.
The central bank will reasonably manage the level of interest rates to prevent capital arbitrage, and prevent the "empty circulation" of funds - or liquidity being stuck in the banking system, he added.
(Reporting by Joe Cash, Kevin Yao, Albee Zhang and Qiaoyi Li in Beijing; Editing by Himani Sarkar & Simon Cameron-Moore)
