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China fine-tunes monetary policy

(China Economic Net)

14:43, November 11, 2011

Edited and translated by People's Daily Online

Beijing, Nov.11 (People's Daily Online) -- Last week, China's central bank purchased 107 billion yuan worth of bills and sold 11 billion yuan on the open market, indicating a net injection of 96 billion yuan into the country's money market, the first weekly net injection after three consecutive weeks of net withdrawals.

The central bank sold 10 billion yuan worth of one-year bills on Nov. 8 and is expected to purchase 109 billion yuan worth of bills this week, so there will be another net cash injection. The central bank is obviously injecting large amounts of cash into the money market in order to maintain stable interest rates and ease liquidity pressure.

Given the current economic situation, China has fine-tuned its monetary policy at just the right time. According to statistics from the National Bureau of Statistics, the growth rate of the country's Consumer Price Index (CPI) dropped to nearly 6 percent in October from a year earlier, the third consecutive monthly slide.

The slowdown in economic growth, reduced liquidity, decline in global commodity prices, a good autumn harvest and other factors may ease inflationary pressure in the fourth quarter and contribute to a further drop in China's price levels.

China's economic growth is slowing as inflationary pressure eases. GDP growth rate stood at 9.1 percent in the first three quarters of 2011, which is lower than the 9.7 percent growth rate seen in the first quarter and the 9.5 percent growth rate for the second quarter.

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