Zhou says many tools for policy

By Nipa Piboontanasawat | February 9, 2009, Monday |

Print Edition

CHINESE central bank Governor Zhou Xiaochuan said yesterday that the nation doesn't need to rely only on interest rates as a monetary-policy tool.

"We will choose tools according to our economic situation," Zhou told Bloomberg News in Kuala Lumpur. "We don't need to use just one tool."

The central bank has yet to cut the key one-year lending rate this year after five reductions in 2008 that followed the collapse of Lehman Brothers Holdings Inc in September. Deutsche Bank AG said last week that policy makers could be less aggressive as lending surged and China's economy showed signs of bottoming out.

The one-year lending rate is at 5.31 percent, while the equivalent for deposits stands at 2.25 percent.

China's economy grew 6.8 percent in the fourth quarter from a year earlier, the slowest pace in seven years, after gaining 9 percent in the previous three months.

A record 1.2 trillion yuan (US$175 billion) of new loans in January, reported by China Securities Journal, and two monthly rises in a manufacturing index, are tentative signs that the economy may revive, some economists say.

Economy

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Zhou says many tools for policy

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