Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

China’s Central Bank Says Inflation Risks Are Controllable

Published 15/10/2021, 10:28 pm
Updated 15/10/2021, 10:28 pm
© Reuters.

© Reuters.

(Bloomberg) -- China’s inflation risks are “controllable” and while rising costs may hurt small businesses, authorities have increased support for those types of firms, central bank officials said.

Sun Guofeng, head of the monetary policy department, said at the briefing in Beijing on Friday that producer price inflation will remain elevated in the short term before falling toward the end of the year, though imported inflation and the impact of the global commodity boom is controllable.

People’s Bank of China officials reiterated an earlier policy stance that monetary policy will be flexible, targeted, reasonable and appropriate.  The central bank has maintained a largely neutral monetary policy this year, guiding credit growth to slow down while keeping liquidity stable. Governor Yi Gang recently vowed to keep a “normal” monetary policy for as long as possible and avoid large-scale stimulus. 

While consumer inflation is expected to pick up, it will remain within reasonable range, Sun said. Small businesses in downstream industries may be affected by the increase in costs, and the PBOC has increased support to those firms, he said.

Other highlights from the PBOC briefing:

  • PBOC will make use of all kinds of policy tools to keep liquidity reasonably ample
  • Macroprudential management of cross-border capital flows will be increased
  • Policy makers will ensure good coordination between monetary policy this year and next year
  • PBOC has made arrangements to reduce the impact of policy changes in advanced economies on China’s economy
  • The macro leverage, or overall debt ratio in the economy, reached 274.9% by the end of the first half of the year and likely remained stable in the third quarter

Many economists expect the central bank to cut banks’ reserve requirement ratio by the end of the year to boost liquidity and replace maturing policy loans. Interest rates are expected to stay unchanged though.

The PBOC officials said authorities have asked banks to keep loans to the real estate industry stable and orderly to limit contagion from the debt crisis of developer China Evergrande (HK:3333) Group.  Evergrande’s risks are controllable and unlikely to spread, they said.

 

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.