Thaindian News

Beijing, Apr 7 (ANI): Chinese inflation may top an annual rate of six percent in the coming months, preventing any relaxation of monetary tightening, said the China Securities Journal.

The national securities newspaper revealed it a day after the central bank raised interest rates for the fourth time since October, The China Daily reports.

“Under severe controls from the central bank, monetary conditions fuelling price rises have clearly been curbed. But inflationary pressure still cannot be overlooked,” the newspaper cited.

“Keeping inflation in check remains the focus of current monetary policy. There is still room for interest rates, the reserve requirement ratio and the exchange rate to move higher,” it added.

China increased benchmark one-year deposit and lending rates by 25 basis points, raising suspicions that data next week may show inflation rose more than expected in March.

The newspaper cited market estimates that the consumer price index might have hit a 32-month-high of 5.2 percent in the year to March and that the world’s second largest economy may grow 9.5 percent in first quarter, relieving any concern that interest rate rises would affect economic expansion.

“It’s unlikely that monetary policy will be loosened in the second quarter or even over a longer period of time,” the newspaper added.

It further said China’s consumer Price Index (CPI) will probably stay above 5 percent and even hit 6 percent year-on-year in the second quarter.

It reported China might allow the yuan to rise more than 5 percent this year. The country would also need to raise banks’ reserve requirements in order to absorb excess cash, partly arising from maturing central bank bills and repos. (ANI)