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PBOC targets inflation again
Source: Agencies |
December 28, 2010, Tuesday
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Print Edition
Print Edition
CHINA'S central bank took aim at inflation once again yesterday by saying it will control lending and money growth in the world's second-biggest economy to head off price pressures and asset bubbles.
In a statement on the central bank's website, Vice Governor Hu Xiaolian said China had been normalizing policy and will explore new ways to manage excess cash, which is seen as a major driver behind 28-month high inflation.
Her remarks reinforced statements from China's top leaders that the task of taming inflation will be a priority for the country next year.
"An implementation of prudent monetary policy is helpful in strengthening the management of inflationary expectations and in fending off asset bubbles," Hu said.
On Saturday, the People's Bank of China surprised investors with a 25 basis-point rate rise in benchmark deposit and lending rates, its second increase in just over two months.
Hu reiterated the central bank's determination to drain excess cash from the financial system by using all tools at its disposal: interest rates, reserve requirement ratios, open market operations and more.
"We will explore new tools ... to keep a good control on the gate of liquidity," she said, but did not indicate what these might be.
A steady stream of anti-inflation talk from the Chinese central bank has led many investors to bet on more rate increases in 2011.
A Reuters poll showed investors see the key one-year deposit rate rising to 3.25 percent by the end of next year, from 2.75 percent now.
The specter of more tightening cast a pall over Chinese stocks yesterday, though investors abroad were more sanguine, in part due to confidence that China's steady tightening is a sign of solid growth in its vast economy.
In a separate statement, the monetary policy committee within the PBOC noted China's economic resilience, but with a touch of caution.
"The improving trend in our economy is solidifying and the financial system is working smoothly," the committee said after a quarterly meeting. "But it is still a pressing task to manage credit, money and liquidity as well as cut financial risks."
In a statement on the central bank's website, Vice Governor Hu Xiaolian said China had been normalizing policy and will explore new ways to manage excess cash, which is seen as a major driver behind 28-month high inflation.
Her remarks reinforced statements from China's top leaders that the task of taming inflation will be a priority for the country next year.
"An implementation of prudent monetary policy is helpful in strengthening the management of inflationary expectations and in fending off asset bubbles," Hu said.
On Saturday, the People's Bank of China surprised investors with a 25 basis-point rate rise in benchmark deposit and lending rates, its second increase in just over two months.
Hu reiterated the central bank's determination to drain excess cash from the financial system by using all tools at its disposal: interest rates, reserve requirement ratios, open market operations and more.
"We will explore new tools ... to keep a good control on the gate of liquidity," she said, but did not indicate what these might be.
A steady stream of anti-inflation talk from the Chinese central bank has led many investors to bet on more rate increases in 2011.
A Reuters poll showed investors see the key one-year deposit rate rising to 3.25 percent by the end of next year, from 2.75 percent now.
The specter of more tightening cast a pall over Chinese stocks yesterday, though investors abroad were more sanguine, in part due to confidence that China's steady tightening is a sign of solid growth in its vast economy.
In a separate statement, the monetary policy committee within the PBOC noted China's economic resilience, but with a touch of caution.
"The improving trend in our economy is solidifying and the financial system is working smoothly," the committee said after a quarterly meeting. "But it is still a pressing task to manage credit, money and liquidity as well as cut financial risks."
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