Central bank chief warns of inflation risk

08:51, January 06, 2011      

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A woman walks by a sale advertising poster in Beijing, capital of China.Photo:Xinhua

China's Central Bank Governor Zhou Xiaochuan warned Wednesday that inflation was mounting and that more could be done to guide the growth of money, an indication that price pressures still top the list of official concerns.

In an interview with a magazine run by the People's Bank of China, Zhou spoke confidently of the country's economic growth prospects, but he sounded a more cautious note on inflation, which is running at its fastest in more than two years.

"China's economy is continuing its steady and relatively fast growth. The recovery trend has been further strengthened, and growth momentum is relatively strong," Zhou said. "But our country is also facing rising inflationary pressure and expectations."

Zhou's warning on pricing pressures is the latest from a Chinese official, as the highest inflation in 28 months and record house prices have sown public discontent and sparked government concern.

In keeping with recent vows to use a slew of monetary policy tools, Zhou said Chinese lenders could be ordered to lock up different-sized portions of their deposits at the central bank, an administrative measure that limits lending.

Of late, Chinese central bank officials have repeatedly floated the idea of using such differentiated reserve requirements.

Source: Global Times
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