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Experts: Cooling inflation leaves room for policy adjustments (8)

By Lu Hui (Xinhua)

14:03, November 14, 2011

The report also said that the possibility of reducing the interest rate in the short term is also slim considering labor cost is on the rise and medium- and long-term inflationary factors still exist with the fast growth of China's economy.

Li Daokui, an adviser to the central bank's monetary policy committee, said that Beijing should maintain its current policy stance and adopt "targeted easing" to support smaller businesses that have been hardest-hit by the credit crunch.

China raised the threshold for value-added and business taxes last month and unveiled new incentives to encourage banks to lend more to small firms, as part of a wider campaign to reduce costs on enterprises to support the economy against an uncertain global economic backdrop.

The People's Bank of China (PBOC), the country's central bank, announced Friday that the nation's new yuan-denominated lending reached 586.8 billion yuan (92.7 billion U.S. dollars) in October, up 17.5 billion yuan year-on-year.

New loans last month also represented a sharp increase from 470 billion yuan in September, the PBOC said in a statement on its website.

E Yongjian, a financial researcher from the Bank of Communications, said the sharp rise in new lending meant that the credit demand from the economy was high. It was also a result of the fine-tuning of the nation's macro-economic policies.

E expected the central bank to rely more on open-market operations to flexibly regulate liquidity.

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