Money

China's central bank vows to stabilize prices

(Xinhua)
Updated: 2010-12-28 09:41

BEIJING - The People's Bank of China (PBOC), the country's central bank, reaffirmed Monday that it would give more prominence to stabilizing prices, and implementing a prudent monetary policy during the next year.

Further, China will make its monetary policies more targeted, flexible, and effective, employing multiple monetary tools to control liquidity and guide the credit growth back to a normal level, said an online statement summarizing a meeting of the PBOC's monetary policy committee.

The statement came one day after the 25-basis-point interest rate hikes went into effect on Sunday.

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More credit should be channeled into the real economy, especially into programs concerning agriculture, the countryside, farmers, and medium-sized and small enterprises, to help promote the strategic and economic restructuring, the statement said.

Those attending the meeting also agreed to further improve the yuan exchange rate formative mechanism, and to keep the yuan exchange rate "basically stable at a reasonable level."

An upward momentum in China's economy has been further consolidated, but the country also faces tough tasks in controlling credit and liquidity growth as well as warding off financial risks.

China's consumer price index (CPI), a main gauge of inflation, accelerated to a 28-month high in November of 5.1 percent, while new loans reached 7.45 trillion yuan ($1.11 trillion) in the first 11 months of this year, compared to the government's full-year target of 7.5 trillion yuan.

The PBOC announced Saturday that it would raise the one-year lending and deposit interest rates for the second time this year, in an effort to fight rising inflationary pressures.