Taming inflation still a priority: central bank

The long-term goal of China's monetary policy is to control inflation, maintain economic growth and a high employment rate and maintain a balance in the country's international payments, central bank governor Zhou Xiaochuan said Friday. Zhou made the remarks at the 16th World Congress of the International Economic Association (IEA), which was held from July 4 to 8 at Beijing's Tsinghua University. Zhou's remarks came just one day before June's Consumer Price Index (CPI) will be released. The CPI is predicted to hit a new high, well above the government's 2011 target ceiling of 4 percent. Zhou said that taming inflation remains a top priority for the government, even as economic growth continues to slow down. The CPI, a main gauge of inflation, rose by 5.5 percent in May over the previous year, setting a 34-month high. Premier Wen Jiabao said in late June that the central government will have difficulties in keeping inflation under the 4 percent target. However, he added that the CPI will be kept under 5 percent. "China's inflation partially comes from outside factors. China's central bank is making efforts to control money supplies and inflation," said Dr. Dwight H. Perkins, a Harvard economist who also attended the IEA World Congress. China's central bank announced on Thursday that it would raise interest rates for the third time this year, lifting its benchmark one-year borrowing and lending rates by 25 basis points. The bank raised its benchmark one-year deposit rate to 3.50 percent and its one-year benchmark lending rate to 6.56 percent. The central bank has also hiked its reserve requirement ratio for banks six times this year. According to Zhou, interest rate hikes are not the only tool that the central bank can use to control inflation, with quantitative tools also playing an important role.