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People's Daily Online>>China Business

Central bank on path of prudence

By Wang Xiaotian (China Daily)

08:27, February 20, 2012

Falling growth and inflation fight require caution, bank official says

BEIJING - Prudence will be the watchword amid global economic uncertainty and the battle against inflation, the central bank said on Sunday.

"The pressures of slowing growth and rising inflation exist at the same time. The monetary stance will remain prudent," Jin Qi, assistant governor of the People's Bank of China, said in a statement published on the bank's website.

The remarks came a day after the central bank announced it will lower the reserve requirement on commercial lenders, for the second time in three months, to inject more liquidity into the system.

The central bank has to be cautious due to the uncertain global outlook and ongoing domestic economic development, Jin said.

The central bank said on Saturday that it will cut the reserve requirement ratio, or the proportion of money that lenders must set aside as reserve, by 50 basis points, effective from Feb 24.

Before the announcement, the reserve for major lenders stood at 21 percent. The move was expected to add about 400 billion yuan ($65.5 billion) to the market.

It followed a cut in the reserve requirement in December by 50 basis points. That cut was the first since December 2008.

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