China will continue to tighten monetary policy for some time as the world’s second-largest economy tries to tame inflation, the central bank chief was quoted by state media saying yesterday.
People’s Bank of China governor Zhou Xiaochuan (周小川) said policymakers would use various measures to control inflation, which he described as high, but warned too many interest rate hikes would attract “hot money,” Chinese-language Caijing magazine said.
Zhou made the remarks on the sidelines of an international forum on the southern island of Hainan after Beijing released data on Friday showing China’s consumer prices last month rose at the fastest pace since July 2008.
The politically sensitive consumer price index rose 5.4 percent year-on-year in March — well above the government’s target of 4 percent and fueled expectations for further interest rate hikes and lending restrictions.
Zhou told reporters China would also increase the flexibility of the yuan exchange rate — a move analysts say would help Chinese policymakers control inflation and boost domestic consumption by making imported goods cheaper.
China Investment Corp (CIC, 中國投資公司) chairman Lou Jiwei (樓繼偉) said yesterday at the Boao forum that global economic growth is likely to slow next year.
Lou, who heads China’s sovereign wealth fund, said he was optimistic about the global economy in the short term and pessimistic in the long term.
Lou said he was “most pessimistic” about the outlook for Europe, citing concerns about banks’ balance sheets, debt restructuring and sluggish demand.
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