China to continue prudent monetary policy: PBOC

Updated: 2011-07-05 09:25
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BEIJING -- The People's Bank of China (PBOC), or the central bank, said Monday it would continue to implement a prudent monetary policy as inflationary pressures still remained high.

Although the economy is headed towards the government-set macro control target, the country still faces a complicated economic and financial situation, with fragile global recovery and other uncertainties, said an online statement summarizing a quarterly meeting of the PBOC's monetary policy committee.

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The government will work to make the monetary policy more stable, targeted and flexible. It will also employ multiple monetary tools to check liquidity and keep the money supply at a reasonable level, the statement said.

Efforts should be made to optimize the country's credit structure, increase loan support to both key and weak sectors, especially in the agricultural sector and middle and small-sized enterprises, it said.

The government will further improve the formation mechanism of the yuan exchange rate and keep it basically stable at a proper and balanced level, it added.

The country's consumer price index, a main gauge of inflation, accelerated to 5.5 percent in May, the highest level in 34 months and well above the government's target ceiling of 4 percent.

This year, China has made curbing inflation a top priority and implemented a prudent monetary policy.

The PBOC has increased the bank reserve requirement ratio six times this year and interest rate twice.