China's central bank is concerned about growing inflation pressure, though it
does not say whether an interest rate hike is likely, the Shanghai Securities
News reported yesterday, as two securities analysts forecast the country's
consumer price index (CPI) would outgrow market expectations this year.
"The current macro-control faces multiple challenges in the financial sector.
As the chance of price rises increases, investment and bank lending may rebound
and excess liquidity will remain," vice governor of the People's Bank of China
Xiang Junbo told an ongoing conference on bank loans and financial markets in
Beijing.
Thursday's Shanghai Securities News quoted unnamed insiders as saying the
central bank was now "highly alert" to inflation.
The central bank may "take action" as soon as January's CPI, the country's
main measure of inflation, is released, said the report.
Zhou Xiaochuan, governor of the People's Bank of China, previously said it
was too early to target inflation although the central bank was keeping a close
eye on it.
Lu Wenlei and Qu Qing, two analysts with the Shanghai Shenyin Wanguo Research
and Consulting Co. Ltd, have forecasted the CPI would rise month by month to
three percent in the first quarter and an increase of the interest rates was
only a matter of time.
They raised this year's predicted CPI to 2.5 percent from the previous two
percent.
The rising prices of farm produce on the international market have made grain
price fluctuations a great uncertainty in the first half of this year, while
prices of non-food items were growing at a greater pace, they
said.