China PBoC´s Zhou says monetary policy to favor stability in 2005 - report
[2 questions Yiwu, Is this a person of sufficient authority to set policy? What the H is he saying exactly? What's this talk of deflation? (oops that's 3 questions) thanks Mish]
Wednesday, November 17, 2004 2:52:23 AM
afxpress.com
China PBoC's Zhou says monetary policy to favor stability in 2005 - report BEIJING (AFX) - China's monetary policy will lean towards stability next year, Zhou Xiaochuan, governor of the People's Bank of China, said in the China Securities Journal
"The central bank is concerned about the trend in inflation. Taking into account the rapidly rising prices of production materials and that the economy is still attracting big investment, monetary policy in 2005 will lean towards stability," Zhou was quoted as saying
The consumer price index was up 4.1 pct year-on-year for the first 10 months of 2004 and the central bank said yesterday in a research report that CPI growth for the year is expected to be around 4.1 pct. He also said interest rates will be flexible and that the central bank will fix rates not only as a result of cyclical factors, but also taking into account external influences. China's central bank controls interest rates at commercial banks. Once set, these usually remain unchanged for years
Last month, the PBoC, for the first time in nine years, raised the one-year lending and deposit rates both by 0.27 percentage points to 5.58 pct and 2.27 pct respectively. "If there were sudden deflation in China, the interest rate would be downgraded," Zhou said. He also said China's forex policy should take into account more domestic factors
"But as a responsible big country, China will also consider some external factors," Zhou said. Zhou reiterated China's policy of liberalizing its forex controls. "Some (forex control) policies are unnecessary and should be abandoned," Zhou said |
