Economy

Central bank raises priority of price controls

(Xinhua)
Updated: 2011-01-30 22:41

BEIJING - China's central bank said late Sunday that it would raise the priority of keeping overall price levels under control in 2011 by adopting a prudent monetary policy.

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"Controlling overall price levels will be higher up the agenda in 2011, while the financial system should be kept secure and sound," said a report on the People's Bank of China (PBOC) website.

China's consumer price index (CPI) rose 4.6 percent from a year earlier in December, down from 5.1 percent in November, which was the fastest rate in more than two years. Last year, the CPI climbed 3.3 percent, exceeding the central government's official target of 3 percent.

Rising consumer prices have prompted the central bank to launch a series of monetary-tightening measures, including two interest rate increases and a series of rises in the bank reserve requirement ratio  since the beginning of last year.

The PBOC would continue to utilize price and quantitative tools such as interest rates, reserve requirement ratios and open market operations to reach the goal and improve the monetary policy tools, said the report.

The Chinese authorities first announced last month a shift to a "prudent" monetary policy in 2011 as it sought to rein in liquidity, combat accelerating inflation and limit the risk of asset bubbles.

The central bank said it expected China's broad money supply (M2), which covers cash in circulation and all deposits, to grow 16 percent year on year in 2011, a growth rate lower than the 19.7 percent of last year.