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