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PBOC policies to be 'prudent'
By Feng Jianmin |
November 17, 2011, Thursday
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Print Edition
Print Edition
CHINA will continue to carry out "prudent" but targeted and flexible monetary policies due to stubborn inflationary pressure, the central bank said yesterday.
"Prices are still high, and inflationary expectations will not easily change in the short term as global monetary conditions are extremely loose and China grew too rapidly in the past two years," the People's Bank of China said yesterday in its third-quarter monetary report. "China can't loosen control over prices because the country is still facing inflationary pressure."
Urban residents' inflationary expectations have grown to the highest since 2009, the PBOC said yesterday, citing a survey of urban depositors conducted in the third quarter. An index tracking their inflationary expectations rose 2.6 percentage points in the July-September period from the previous quarter. More people also said that current property prices were too high, the survey showed.
The PBOC also warned that rising domestic labor and resource costs may both "exacerbate inflationary expectations."
Accelerating inflation in emerging markets puts policymakers in dilemma because increasing borrowing costs may attract "hot money" inflows given the relatively low interest rates in developed economies, the PBOC added.
However, the PBOC reiterated Premier Wen Jiabao's pledge to "fine-tune" the monetary policies "at the appropriate time and with appropriate strength" to sustain growth.
"We will closely monitor the changes in the economic and financial situations both domestically and globally, and fine-tune the policies when needed," the PBOC said.
It added that its targeted policies include more financial support for small- and medium-sized companies as well as boosting the construction of affordable homes.
"Positive factors that may help stabilize prices are increasing," the central bank said, citing the prospect of a bumper autumn grain harvest and lower commodity prices as global expansion eases.
"The decline in consumer price gains may accelerate should domestic and global growth slow further," it said.
China's inflation in October eased to 5.5 percent, the lowest in five months, the National Bureau of Statistics said last week.
The world's second-largest economy expanded 9.1 percent in the third quarter, the least since 2009, amid the government's campaign to cool consumer and property prices.
"Prices are still high, and inflationary expectations will not easily change in the short term as global monetary conditions are extremely loose and China grew too rapidly in the past two years," the People's Bank of China said yesterday in its third-quarter monetary report. "China can't loosen control over prices because the country is still facing inflationary pressure."
Urban residents' inflationary expectations have grown to the highest since 2009, the PBOC said yesterday, citing a survey of urban depositors conducted in the third quarter. An index tracking their inflationary expectations rose 2.6 percentage points in the July-September period from the previous quarter. More people also said that current property prices were too high, the survey showed.
The PBOC also warned that rising domestic labor and resource costs may both "exacerbate inflationary expectations."
Accelerating inflation in emerging markets puts policymakers in dilemma because increasing borrowing costs may attract "hot money" inflows given the relatively low interest rates in developed economies, the PBOC added.
However, the PBOC reiterated Premier Wen Jiabao's pledge to "fine-tune" the monetary policies "at the appropriate time and with appropriate strength" to sustain growth.
"We will closely monitor the changes in the economic and financial situations both domestically and globally, and fine-tune the policies when needed," the PBOC said.
It added that its targeted policies include more financial support for small- and medium-sized companies as well as boosting the construction of affordable homes.
"Positive factors that may help stabilize prices are increasing," the central bank said, citing the prospect of a bumper autumn grain harvest and lower commodity prices as global expansion eases.
"The decline in consumer price gains may accelerate should domestic and global growth slow further," it said.
China's inflation in October eased to 5.5 percent, the lowest in five months, the National Bureau of Statistics said last week.
The world's second-largest economy expanded 9.1 percent in the third quarter, the least since 2009, amid the government's campaign to cool consumer and property prices.
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