2007 inflation to be around 3% - official

Updated: 2007-06-25 09:08

China's inflation rate will be around 3 percent this year, a top central bank official said on Sunday, adding that the Chinese government was keen for the country's real interest rates to remain positive.

Yi Gang, assistant governor at the People's Bank of China, said that the Chinese government was keeping a close eye on inflation, which hit a 27-month high of 3.4 percent in May on surging food prices, especially pork.

"We are very alert about inflation," Yi said on the sidelines of the World Economic Forum. "We will try to make it for the whole year at about 3 percent."

China's central bank Governor Zhou Xiaochuan said on Saturday that inflation may rise despite tighter monetary policy and that a further increase in interest rates cannot be ruled out.

Yi declined to comment on whether the central bank will raise interest rates further, but said that the government is adhering to a principle of keeping real interest rates positive.

"We will try to make it...by and large positive," Yi said. "(If) interest rates are negative for a long time, (it) is not good for the economy."

After the May consumer price data was released last week, Premier Wen Jiabao said the government was prepared to tighten policy further to restrain the economy and keep inflation in check.

The central bank has raised interest rates four times in the past 14 months, most recently in May, bringing the one-year deposit rate to 3.06 from 2.79 percent and the one-year benchmark lending rate to 6.57 percent from 6.39.

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