PBOC officials reportedly worried about inflation, tipping higher rates
By Chris Oliver, MarketWatch
HONG KONG (MarketWatch) — China should adopt a tighter monetary policy to curb inflation and should be on watch for risks from overly loose monetary conditions, according to a state-media report citing senior officials with the central bank.
Sheng Songcheng, who heads the People’s Bank of China’s Shenyang branch, said China is facing increasing pressures from imported inflation in the form of surging inflows of speculative capital, according to comments cited Monday in China’s Financial Times, a PBOC-backed publication.
The publication also cited Zhang Jianhua, head of the research bureau at the central bank, as saying the PBOC will gradually guide monetary conditions back to more normal levels in the next stage of policy oversight.
Zhang was quoted as saying that China should take moves to make its monetary policy more stable and healthy “as soon as possible.”
China has taken steps to tighten policy in the past month, increasing the ratio of reserves banks must set aside by 1 percentage point, while also lifting the base lending rate a quarter-point, the first such hike in nearly three years.
Chinese stocks traded lower Monday, with the Shanghai Composite Index (CN:SHCOMP 2,954, -31.37, -1.05%) falling 0.9% to extend the benchmark’s 5.2% tumble Friday, its biggest one-day drop in 14 months.
Hong Kong stocks also dropped after gains earlier in the session, with the Hang Seng Index (HK:HANGSENG 24,060, -162.92, -0.67%) losing 0.8% of its value by the midday break, on top of Friday’s 1.9% decline.
The Hong Kong index was weighed by mainland Chinese banks, though a mixed performance among property stocks provided some support.
