Central bank to cool inflation with monetary tightening
19 October 2007
People's Bank of China chief Zhou Xiaochuan said Thursday that China may impose additional interest rate hikes and implement monetary policy measures to prevent overheating and control inflation, state media reported. This includes higher reserve ratios for commercial banks, more bond sales, and interest rates hikes. Inflation fell to 6.2% from 6.5% the previous month after the central bank moved to raise borrowing costs and bank reserve requirements, but further economic tightening actions will still be taken. "The yuan will eventually become a freely convertible currency and China will open its capital account, even if we haven't set a clear timetable," the rumored-to-be outgoing chief said. Zhou said the bank considers growth, inflation, employment and the international balance of payments in setting the country's monetary policy.
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