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China's central bank said that it is ready to rein in liquidity and control credit as the major developing economy is facing rising pressure of inflation and equity bubbles.
The People's Bank of China said Tuesday that it will gradually "normalize" the monetary policy from a stimulus-driven mode that was introduced in late 2008 to counter the global financial crisis. And, China will from now on tighten control over liquidity to maintain a moderate credit growth in the coming months of the year, the bank said in a statement on its website. On Tuesday, several Chinese business newspapers also reported that the country is to discontinue its "fairly loose" monetary policy to a "prudent" one in 2011. And, the policy shift is expected to be defined by the Central Economic Work Conference, scheduled to convene in Beijing early December. The announcement by the central bank comes after it raise the benchmark one-year lending and deposit interest rates on October 20, the first rate hike in three years. Some analysts have speculated that China is expected to curb bank lending from the 7.5 trillion yuan planned for this year to about 6.5 trillion yuan next year. To prevent its economy from diving in 2009 after the global financial meltdown, the country's banks loaned 9.59 trillion yuan that year, a historic high. The central bank will "gradually implement market-orientated reform of interest rates and keep the yuan exchange rate basically stable," said the statement. "The international economic recovery remains relatively slow, China's economy is growing rapidly, and inflation expectations and the upward pressure on prices cannot be ignored," the central bank said. China is expected to attain 10 percent growth in its gross domestic product this year, and keep its annual inflation rate at 3.2 percent. In March, Premier Wen Jiabao called on his government to maintain the inflation rise at 3 percent. By People's Daily Online
China's central bank said that it is ready to rein in liquidity and control credit as the major developing economy is facing rising pressure of inflation and equity bubbles.
The People's Bank of China said Tuesday that it will gradually "normalize" the monetary policy from a stimulus-driven mode that was introduced in late 2008 to counter the global financial crisis. And, China will from now on tighten control over liquidity to maintain a moderate credit growth in the coming months of the year, the bank said in a statement on its website. On Tuesday, several Chinese business newspapers also reported that the country is to discontinue its "fairly loose" monetary policy to a "prudent" one in 2011. And, the policy shift is expected to be defined by the Central Economic Work Conference, scheduled to convene in Beijing early December. The announcement by the central bank comes after it raise the benchmark one-year lending and deposit interest rates on October 20, the first rate hike in three years. Some analysts have speculated that China is expected to curb bank lending from the 7.5 trillion yuan planned for this year to about 6.5 trillion yuan next year. To prevent its economy from diving in 2009 after the global financial meltdown, the country's banks loaned 9.59 trillion yuan that year, a historic high. The central bank will "gradually implement market-orientated reform of interest rates and keep the yuan exchange rate basically stable," said the statement. "The international economic recovery remains relatively slow, China's economy is growing rapidly, and inflation expectations and the upward pressure on prices cannot be ignored," the central bank said. China is expected to attain 10 percent growth in its gross domestic product this year, and keep its annual inflation rate at 3.2 percent. In March, Premier Wen Jiabao called on his government to maintain the inflation rise at 3 percent. By People's Daily Online |
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