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People's Daily Online>>China Business

China to continue prudent monetary policy, inflation control

(Xinhua)

09:28, November 17, 2011

BEIJING, Nov. 16 (Xinhua) -- The People's Bank of China (PBOC), the country's central bank, said Wednesday it will continue to maintain the current prudent monetary policies while making them more targeted and flexible.

The country will closely monitor the changes in economic and financial situations both domestically and globally, and preset or fine tune the policies when needed, according to a PBOC report concerning monetary policies implemented in the third quarter.

The central bank's decision to continue the prudent monetary policies came amid speculation of policy loosening in the world's second largest economy as GDP growth in the third quarter expanded at the slowest pace in two years.

The economy grew 9.1 percent year-on-year in the third quarter, compared to 9.5 percent in the second quarter and 9.7 percent in the first. The nation's consumer price index (CPI), the main gauge of inflation, increased 5.5 percent last month year-on-year, marking the slowest rise since May.

However, the report warned that the future trend of consumer prices remained unclear and that the foundation for stable price levels was still not solid. The central bank said the nation's policies to control inflation could not be loosened.

It said that a continuous rise in the country's labor costs and the prices of services was among the factors that could heighten inflationary expectations, while the CPI would also become more sensitive to the general demand.

An index tracking the urban resident's inflationary expectations rose 2.6 percentage points in the third quarter compared to the previous quarter, while more people held that the current property prices were too high.

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