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MNI POLICY: China 2021 Inflation May Rise Moderately: PBOC

BEIJING (MNI)

Consumer prices in China are expected to gain moderately this year as the economy and spending steadily recover, officials at the People's Bank of China brief reporters Friday. Core CPI will remain relatively low due to the sluggish growth of household income, waves of Covid-19 pandemic and the some weakness in the service sector, but the overall index will probably rise before stabilizing, Deputy Governor Chen Yulu said.

Possibly looking to dampen speculation that the PBOC may lower banks' required reserve ratios ahead of the mid-February Chinese New Year, bank officials said they see the current level as "not high" and reaffirmed a "normal" monetary policy.

YUAN'S GAIN

Noting the yuan rose 6.9% against the dollar in 2020, the central bank said the degree of gain was "not historical" and the rate exchange rate is in line with economic fundamentals and trade situation, and the two-way volatility will be the norm, said Sun Guofeng, the head of monetary policy department.

Chen said international market volatility and fluctuating cross-border capital flows were largely due to to easing policies implemented by overseas economies.

Debt risks of low-income countries have also rising during the pandemic, affecting the recovery of the global economy, Chen said, adding that the PBOC will ensure the stability and continuity of its policies, improve prudential management and seek closer international policy coordination, such as through the G20 mechanism,.

The current level of interest rates is appropriate given that the economy is back in its potential growth range, corporate credit demand is robust and credit is expanding at a reasonable pace, Sun said.

MNI London Bureau | +44 203-865-3812 | les.commons@marketnews.com
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MNI London Bureau | +44 203-865-3812 | les.commons@marketnews.com
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