China to continue with tight monetary policy

March 31st, 2008 - 8:21 pm ICT by admin  

Beijing, March 31 (Xinhua) China’s central bank said Monday it would continue with tight monetary policy to adjust to changes in the domestic and world economies. The People’s Bank of China (PBOC) on its website said the economic and financial situations were stable.

The consumer price index (CPI) increased by 8.7 percent year-on-year in February, the biggest jump in nearly 12 years and well above the annual target of 4.8 percent set by the central government for 2008.

Domestically, the country faced pressure from a resurgence in fixed asset investment, excessive credit supply and liquidity, according to the central bank.

Credit preference would be given to relatively weak sectors including agriculture, employment, education and small and medium-sized enterprises.

The central bank will continue improving the exchange rate regime “in a pro-active, manageable and and gradual manner” while allowing the market to play a bigger role in determining the rate.

It would also introduce more flexibility to the renminbi exchange rate and keep it stable at a reasonable and balanced level, said the central bank.

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