The story appears on

Page A3

June 11, 2021

GET this page in PDF

Free for subscribers

View shopping cart

Related News

Home » Business

PBOC: Inflation under control, monetary policy to be steady

CHINA’S central bank governor said inflation is “basically under control,” and monetary policy would be kept steady, in comments a day after concerns over inflationary pressures were fanned by data showing the fastest rise in factory-gate prices in 12 years.

“We must adhere to policy stability as a priority, and stick to implementing normal monetary policy,” Yi Gang told the Lujiazui financial forum in Shanghai yesterday, forecasting this year’s inflation at below 2 percent.

“Keeping interest rates at a proper level is conducive to the stable and healthy development of the markets,” the People’s Bank of China governor said. Yi said that China’s interest rates, though higher than major economies, are still relatively low among developing and emerging economies.

In addition to liberalizing interest rates, Yi pledged to unleash the potential of Loan Prime Rate reform.

Data released on Wednesday showed China’s May factory gate prices rose at their fastest annual pace in over 12 years due to surging commodity prices.

Yi said this was largely the result of a low base last year, adding that there is controversy over how long this year’s rapid rise in global inflation — fueled by surges in oil and commodity prices — would last.

China also reported consumer price data on Wednesday, which showed a 1.3 percent rise for May — the biggest year-on-year increase in eight months.

But it was still well below the government’s official target of around 3 percent, and Yi said he expected average annual inflation to be below 2 percent this year.

“Of course, there are uncertainties in the overseas pandemic situation, economic recovery and macro policies, so we should be on alert toward both inflationary and deflationary pressure in many aspects,” he said.

The potential growth rate of China’s economy is slowing, and future expansion must be driven by rising productivity and reforms, rather than investment of capital and labor, Yi said, citing the bigger comparison base, slower labor-productivity growth and changes in the population structure.

China’s monetary policy must pay attention to the impact of structural changes on price stability, he added.

He said for monetary and credit policies, emphasis will be placed on two structural aspects — beefing up the development of green finance and increasing support for inclusive finance.

In an aging society, people tend to save more and consume less, curbing inflation, but a green transformation could push up inflation due to rising costs of using fossil fuels, Yi said.

The central bank governor said the PBOC will take a number of measures to help China achieve its carbon neutrality goals, including harmonizing standards for green finance with the European Union, setting up a disclosure system for climate-related information, and incentivizing capital support to green sectors.

The two-day forum that opened yesterday aims to offer inspiring ideas and suggestions for promoting global economic recovery and financial stability.




 

Copyright © 1999- Shanghai Daily. All rights reserved.Preferably viewed with Internet Explorer 8 or newer browsers.

沪公网安备 31010602000204号

Email this to your friend