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Experts: Cooling inflation leaves room for policy adjustments (6)

By Lu Hui (Xinhua)

14:03, November 14, 2011

A recent State Council executive meeting at the end of October has sent a signal of "fine tuning" macroeconomic policy to maintain economic growth. China will make proper fine tuning on its macro policy, keeping it "more targeted, flexible and forward-looking," and continue measures to control consumer prices, China's State Council, or Cabinet, said.

Faced with new problems in the complicated global and domestic economic conditions, China should take pre-measures or fine tune its macro economic regulation at a proper time and at a proper degree, according to a statement released after a State Council executive meeting chaired by Premier Wen Jiabao.

Zhang Liqun said the slowing price increases will create favorable conditions for the country to fine-tune its monetary tightening policies, although inflationary pressure will remain due to a large outstanding broad money supply (M2).

"The size of the money supply remains huge and policymakers should be careful about (loosening) the monetary policy and not ignore its potential for pushing up prices," he said. "It is a crucial moment for the country's macroeconomic control policies and we can't be too careless in loosening the policies."

"The general direction of prudent monetary policy can not change but in practice it can turn from being tight to moderate, so as to consolidate the market basis for economic growth and boost growth engine," Zhang noted.

"Moderation is the key to fine tuning the economic policies as too loose policy will be detrimental to inflation control, whereas, too tight policy will have negative effects on economic growth," Wang Jun gave his opinion, further explaining that macro policy should be made in accordance with the changing economic situation.

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