MNI China Press Digest, April 25: TMLF, RRR Cuts, Inflation

     BEIJING (MNI) - The following lists highlights from Chinese press reports

on Thursday:

     By using its targeted medium-term lending facility (TMLF) instead of

cutting the reserve requirement ratio (RRR), the PBOC has indicated a marginal

tightening of monetary policy, while fiscal policy remains loose, the Securities

Times said in a commentary piece today. The PBOC intends to lower long-term

interest rates to underpin economic growth by using TMLF, while cutting RRR at

this point may push short-term interest rates lower and put upward pressure on

the asset prices, the paper said.

     The PBOC is unlikely to cut the RRR either across-the-board or selectively

in the near future, as the current focus of monetary policy will shift from

'scale expansion to structural optimization', the Economic Information Daily

reported, citing leading analysts. Unblocking the transmission mechanism of

monetary policy, easing the financing difficulty for private and small companies

and liberalizing interest rates will all be a focus in Q2, the paper reported,

citing Dong Ximiao, a VP at the Chongyang Institute for Financial Studies.

     Higher oil prices will constrain central banks' ability to use monetary

policy to boost growth and stabilise stock markets as the global economy and

trade slow, said Mei Xinyu, a MOFCOM-back think tank researcher, in an article

published on 21st Century Business Herald. Escalating U.S. sanctions against

Iran may push up the oil price, as other major oil exporters -- including Saudi

Arabia -- may not be willing to increase production to curb the upward price

pressure, Mei said. China's monetary policy should be prepared for possible

inflation, as it is more easily affected by changing oil price than the U.S.,

Mei added.

--MNI Beijing Bureau; +86 (10) 8532-5998; email: wanxia.lin@marketnews.com

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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