BEIJING: Chinese inflation will moderate in the second half of the year as government measures to curb price rises hit their mark, a vice central bank governor said in remarks published on Wednesday.
The official China Securities Journal also cited Yi Gang as saying that China would keep mopping up excess cash in the economy by raising banks' required reserves and issuing central bank bills.
‘We are confident we can keep inflation under control and will roll out active measures to cope with it,’ Yi said.
The central bank said in its quarterly monetary policy report on Tuesday that there was no absolute ceiling on how high Chinese banks' required reserves may go. It also reiterated that it would deploy a variety of tools to manage inflationary expectations, including raising interest rates and making the yuan more flexible.
Yi said China's largest source of liquidity was its twin capital and current account surpluses, and that the central bank had so far absorbed 80 percent of this pool of cash via higher reserve requirements and bill issuance.
In a separate story, the China Securities Journal cited industry analysts as predicting that the central bank would raise required reserves again in May, its fifth time this year, to absorb some of the money created from hefty foreign inflows this year.
China's consumer price inflation index accelerated to 5.4 percent in the year to March, the fastest in 32 months. Many in the market have long said that inflation would peak in June or July because of a low base of comparison from a year earlier and would recede later in the year.
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