Central bank warning for price ups

In its report on implementing second quarter’s monetary policy, the central bank warns that it should be alert at current inflations and the price ups, and calls for the continuation of moderate easy policy as well as incessant reform of exchange rate mechanism.<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />

The report says it sees a slow recovery of the world economy, presenting that primary products price maintained even, and domestic product capacity growing upward; all this is helpful to stabilize the prices. but, simultaneously there exists potential inflations caused by easy monetary condition, that the whole world becomes too prudent to carry out exit policy, thus arouses inflation expectation, as the hot money have to invest through else ways.  In this case, it needs management further to be strengthened on inflation expectation.

In this case, the central bank asks to plan well the annual credit based on the coming financial situation and the change of foreign exchange flows; moreover, to create a sound monetary environment through comprehensive use of varied monetary policy instrument and other practical measures like liquidity controlling, moderate growth loans, etc.

The central bank also indicates capital constraint mechanism should be strengthened, and the efficiency of capital utilization needs badly to be leveled up through following steps: first, handle well the process and total amount of loans; second, actively promote financial innovation and enhance the ability of asset liability management; third, continually improve commercial banks’ economic capital management with perfect internal assessment procedures for capital adequacy.