Bank chief optimistic
By Zhang Fengming |
March 12, 2011, Saturday
|
Print Edition
Print Edition
INFLATION is expected to remain stable, says China's central bank Governor Zhou Xiaochuan, despite the faster-than-expected February inflation figure released yesterday.
"If we observe the CPI (consumer price index) figures for December, January and February, although they are high, inflationary expectations are currently relatively stable," Zhou said at a news conference on the sidelines of the annual session of the National People's Congress.
China's February inflation was 4.9 percent, the same as January's but higher than the market expected. December's figure was 4.6 percent.
China has made fighting inflation a priority this year and targets an annual figure of around 4 percent. Inflation last year was 3.3 percent.
Alaistair Chan, a Moody's Analytics economist, said a sense that inflation was being brought under control may have encouraged the government to allow retail fuel prices to rise around 4 percent in mid-February.
"Further ahead, slower monetary growth and a slowing economy should crimp inflation pressures," Chan said in a report. "But we still expect inflation to go a little higher before declining by year end."
Zhou said the People's Bank of China will use price and quantitative tools such as interest rates, reserve requirements and open market operations to maintain appropriate liquidity in the banking system, and implement differentiated reserve requirement ratios.
"At this stage, interest rate policy is still a key tool to use," Zhou said.
He also said that exchange rates were not the most important tool for curbing inflation. China will stick to its gradual foreign exchange reform, Zhou said.
Hu Xiaolian, the central bank's deputy governor, said it is believed that there will be fairly big progress in opening China's capital account in the next five years.
But she declined to outline a timetable for the yuan being fully convertible.
"If we observe the CPI (consumer price index) figures for December, January and February, although they are high, inflationary expectations are currently relatively stable," Zhou said at a news conference on the sidelines of the annual session of the National People's Congress.
China's February inflation was 4.9 percent, the same as January's but higher than the market expected. December's figure was 4.6 percent.
China has made fighting inflation a priority this year and targets an annual figure of around 4 percent. Inflation last year was 3.3 percent.
Alaistair Chan, a Moody's Analytics economist, said a sense that inflation was being brought under control may have encouraged the government to allow retail fuel prices to rise around 4 percent in mid-February.
"Further ahead, slower monetary growth and a slowing economy should crimp inflation pressures," Chan said in a report. "But we still expect inflation to go a little higher before declining by year end."
Zhou said the People's Bank of China will use price and quantitative tools such as interest rates, reserve requirements and open market operations to maintain appropriate liquidity in the banking system, and implement differentiated reserve requirement ratios.
"At this stage, interest rate policy is still a key tool to use," Zhou said.
He also said that exchange rates were not the most important tool for curbing inflation. China will stick to its gradual foreign exchange reform, Zhou said.
Hu Xiaolian, the central bank's deputy governor, said it is believed that there will be fairly big progress in opening China's capital account in the next five years.
But she declined to outline a timetable for the yuan being fully convertible.
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