China tight­en­ing will sat­isfy mar­kets: cbank

The Pak Banker - - Company& -

BEI­JING: China will tighten fis­cal pol­icy grad­u­ally in a man­ner "ac­cept­able to the mar­ket", an aca­demic ad­viser to the cen­tral bank said in re­marks pub­lished on Tues­day fol­low­ing an in­ter­est rate rise.

Li Daokui was also cited by the 21st Cen­tury Busi­ness Her­ald as say­ing the govern­ment would tai­lor mon­e­tary pol­icy set­tings dif­fer­ently for dif­fer­ent banks next year, in line with their busi­ness op­er­a­tions.

" The cen­tral bank will re­main grad­ual in its pol­icy moves in the fu­ture and tighten at a pace and fre­quency that is ac­cept­able to the mar­ket," Li said.

China in­creased in­ter­est rates for a sec­ond time in just over two months on Satur­day to rein in in­fla­tion, which hit a 28-month high of 5.1 per­cent in the year to Novem­ber.

" It's very nec­es­sary to raise in­ter­est rates right now," Li said.

"Pol­icy de­ci­sions should mainly con­sider the Chi­nese econ­omy, al­though there will be global hot money in­flows."

He said t he 25-ba­sis­point in­ter­est rate rise would ease in­fla­tion­ary ex­pec­ta­tions to­wards the end of the year. Con­sumer prices were ex­pected to face high up­ward pres­sure be­cause of Chi­nese New Year, which starts on Fe­bru­ary 3.

Chi­nese Premier Wen Ji­abao said on Sun­day that his govern­ment would be able to con­tain in­fla­tion and that the govern­ment would step up ef­forts to pull prop­erty prices back to a "rea­son­able" level.

Li said: "In my un­der­stand­ing, this means no overly fast rise. But if prop­erty prices fall, it will bring new prob­lems to the Chi­nese econ­omy."

It should be sat­is­fac­tory if prop­erty price in­creases keep pace with con­sumer in­fla­tion, Li added. -PB News

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