China warns of inflation rise

China's high infllation rate prompts Beijing to tighten monetary policies

Source: Press TV
http://www.presstv.ir/detail/162845.html

China's Central Bank has warned that inflation still runs high in China, while it has launched measures to tighten monetary policies to rein in price bubbles.

“Inflation pressure is quite big,” the central bank said in its fourth-quarter monetary policy report on its website, citing rising capital inflows, labor costs and resource prices as reasons.

China will face a “relatively stable” external environment this year, and the domestic economy is likely to maintain fast growth due to investment momentum and consumer spending, the report also said.

Economists say high inflation could slow down the growth of the Chinese economy as China's consumer price index, or CPI increased by 4.6 percent in December, compared with November's 5.1 percent annual pace, which was the fastest in more than two years.

Beijing has launched a series of monetary tightening measures, including two interest rate hikes and a number of bank reserve requirement ratio increases over the last year in attempts to dampen rising consumer prices.

Central bank governor Zhou Xiaochuan said on Sunday in Japan that China's inflation is "higher than expected" and warned that banks' reserve requirement ratios (RRR) could be tightened further to mop up excessive liquidity in the country.

The central bank will also step up monitoring of the “overall financing size of the society,” which includes bonds and stocks apart from loans for policies.

China's economy is the second largest in the world.