Monetary Policy to be Maintained Even with Inflation Problems

Monetary Policy to be Maintained Even with Inflation ProblemsChina’s central bank said that it will be maintaining prudent monetary policy for the second half of this year even with the recent problems with inflation that is triggered by the rise in the prices of pork the staple meat of the nation. The People’s Bank of China online statement said that it will keep the policy orientation and flexibility of several multiple monetary tools that will help ensure the liquidity to stay at an appropriate level.

PBOC’s Statement came are concerns that policymakers will be tightening monetary policies as inflation is showing signs of warming because of an unexpected sharp increase in the pork prices. pork accounts for 2.9 percent of the consumer price index and prices has risen more than 20 percent since March while consumer price index only increased by 1.3 percent for the first half of the year. Thus dismissing the concerns that the PBOC stated that the consumer price is steady at a low level and the outlook is stable.

Central bank will continue to improve its leading structure, keep the yuan stable, lower financing costs, boost the economy and stabilize the financial market expectations. Prices of other food items are still stable and are not falling, this plus the weak property prices and decrease in fuel prices will offset the inflationary impact of the pork prices.

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