A woman customer buys pork at a market in Yichang,
central China's Hubei Province in this June 5, 2007 photo.
[newsphoto]
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China's central bank is concerned by inflationary pressures and is determined
to make use of a range of monetary policy tools to contain price increases, a
senior official says.
A recent jump in consumer inflation, which hit 3.4 percent in May from a year
earlier, raised expectations among many analysts that the People's Bank of China
(PBOC) could raise interest rates or carry out other tightening measures soon.
Yi Gang, assistant governor of the central bank, gave no indication of the
timing of any such move, but reasserted the PBOC's focus on prices.
"The central bank has a firm determination to keep inflation in check," Yi
told reporters Wednesday.
"We have many tools in our toolbox, including raising reserve requirements,
interest rates and also open market operations," Yi said.
"We will make comprehensive use of these tools to fight against inflation and
to keep growth in prices and the economy stable."
Yi said asset prices, though important, took a back seat when the central
bank debated whether to tighten policy.
"We are paying keen attention to asset prices, but they are not the decisive
factor when determining macroeconomic control measures. We are mainly concerned
with inflation, which in China mainly means CPI," Yi said.
He said the recent pick-up in CPI was mainly due to increases in pork prices
and other food.
Over the long run, the central bank aimed to keep real interest rates
positive, Yi said.
The recent spike in inflation has pushed real deposit rates into negative
territory, encouraging people to shift their money out of bank deposits into the
red-hot stock market.
"Over a relatively long period of time, it's better to keep real interest
rates at a positive level. Negative real interest rates will have a negative
impact on the economy," Yi said.