China keeps monetary policy tightening in 2011

16:55, August 01, 2011      

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China's central bank said it will continue its prudent monetary policy for the rest of the year to combat price rises which hit 6.4 percent in June.

The People's Bank of China said that it would guard against moving to relaxing its tightening policy in place since October 2010, as inflation expectations among Chinese people remained elevated. It reiterated fighting inflation will keep to be a policy priority.

"Domestic inflation expectations remain on the high side," the People's Bank of China said in comments published on its website on Monday. "The foundation for stabilizing prices is not yet solid, and there is a chance of prices rebounding higher once policy is relaxed."

Analysts see the central bank's stance of fixing on fighting inflation as a possible sign that Beijing may raise interest rates or hike the banks' required reserve ratios in the coming months of 2011.

"We will use interest rates, foreign exchange rates, open market operations, reserve requirements and a mix of policy tools to maintain a reasonable rhythm and scale in total financing," the statement said.

Since October, Beijing has raised interest rates five times and banks' required reserve ratio nine times to rein in inflation.

But even with the steady tightening, China's consumer price index hit a three-year peak of 6.4 percent in June as a spike in pork prices kept inflation elevated.

Other key jobs to be pursued by the central bank include: pressing ahead with liberalizing the interest rate market, expanding a nationwide yuan trade settlement scheme, encouraging banks to extend loans to support governments' affordable housing projects, guarding against price rises in commercial properties, and continuing to reform the yuan exchange rate mechanism and letting market forces play a bigger role in deciding the yuan's value.

By People's Daily Online
 
 
  Weekly review  
 
 
 
     
 
 


(Editor:燕勐)

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