China to slightly ease monetary policy in 2013

BEIJING, Jan. 4 (Xinhua) -- China may fine-tune its monetary policy in 2013 by reducing interest rates and the reserve requirement ratio (RRR) to support economic growth, according to research results published Friday.

A small interest rate cut at the right time could substantially decrease financing costs and improve expectations for profitability, said researchers from the China Development Bank, the State Information Center and the Shanghai Securities News who have worked together to forecast key economic indicators and policies in 2013.

Inflation will likely hit 3 percent this year, lower than the 3.3-percent maximum interest rate that lenders are currently allowed to set for one-year deposits, creating room for further interest rate decreases, the researchers predicted.

The researchers also said they expect moderate reductions for the RRR, or the amount of money banks must set aside as reserves, to prevent a pessimistic economic outlook from taking hold.

The central bank trimmed benchmark interest rates and the RRR twice in the first seven months of 2012 to spur growth. But it has since resisted further cuts, preferring to use open market operations instead.

The RRR for large-sized lenders currently stands at 20 percent, leaving plenty of room for a cut, the researchers said in several reports published in the Shanghai Securities News.

We recommend:
BJ-GZ HS to add 30b yuan to GDP annually	Great changes in Zhengzhou railway station	Wanda Group ventures onto the global stage
Sports car makers look to mainland market	Top Ten Economic Events in 2012	'Gold road' laid with gold bars