Economy

Economist: CPI likely to grow 3% in 2010

By Zuo Likun (chinadailty.com.cn)
Updated: 2010-01-17 16:00
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Consumer price hikes should remain low in 2010, with an estimated annual Consumer Price Index of about 3 percent, an expert said during an annual economy meeting in Beijing on Sunday.

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Niu Li, a macro-economist from the Economy Forecast Department of the State Information Center, told chinanews.com.cn that a moderately loose monetary policy in 2009, combined with nearly-doubled bank lending of 9.59 trillion yuan (US$1.4 trillion), fed speculation of inflation risks.

Policy makers stressed their support of the flexibility of macroeconomic policy according to conditions, with special concerns about a risk of an assets bubble and increasing inflation.

People's Bank of China, the country's central bank, decided to raise the reserve requirement ratio of banks by 0.5 percentage points beginning Jan 18, which Niu said would help freeze liquidity.

The strong harvest last year also will ease pressure on inflation, since food accounts for about 30 percent of the calculation of the Consumer Price Index, he said.
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