Zhou: No monetary restraints in near future

Updated: 2007-05-25 14:48

People's Bank of China governor Zhou Xiaochuan said yesterday that the government will not exercise any monetary restraints in the near future.

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"The government needs time to observe the feedback of recent policies before taking further measures to cool down the economy," Zhou told reporters after meeting with the United States' senators during the U.S.-China Strategic Economic Dialogue in Washington.

Last Friday, the central bank raised the benchmark one-year interest rate by 0.27 percentage points to 3.06 percent, and one-year lending rate by 0.18 percentage points to 6.57 percent. It also ordered commercial banks to set side 11.5 percent, of their deposits as reserves, up from 11 percent.

That marked the first simultaneous use of two monetary tools in a decade, as well as the eighth increase in reserve ratio since last July and fourth interest rate hike since last April.

Also on Friday, the reminbi's daily trading limit against the US dollar was widened to 0.5 percent from 0.3 percent.

Undaunted by the latest tightening measures, Chinese stocks has rebounded this week, though with strong daily up-and-downs.

Xiang Huaicheng, Chairman of the National Council for Social Security Fund, admitted that the Chinese mainland's stock market has turned somewhat overheated recently.

"The bubbles exist", he said. "But the stock market is just like beer, it is good to have some bubbles unless there are too many." However, he pointed out that investors should be fully aware of the risksin the market.

(For more biz stories, please visit Industry Updates)