Central Bank: Continue To Use Interest Rates And Other Means To Manage Inflation Expectations.

The first quarter of 2011 released by the people's Bank of China yesterday (May 3rd)

The central bank said in its report that on the one hand, the relationship between controlling the total amount of money and improving the structure should be handled well.

While meeting the needs of economic development, we must eliminate the monetary conditions of inflation, and strive to optimize the structure so as to better meet diversified investment and financing needs.

On the other hand, we must deal with the relationship between promoting economic growth and restraining inflation.

The current growth rate and employment are at a reasonable level. Stabilizing prices and managing inflation expectations is the key and the primary task of macroeconomic regulation and control.

We must maintain the necessary regulation and control efforts, consolidate and strengthen the results of pre regulation and control, and further consolidate the good momentum of economic development.

According to the report, the utilization and adjustment of the reserve instrument are dependent on multiple variable conditions, so there is no absolute upper limit.

According to the changes in the economic and financial situation and foreign exchange movements, we should make comprehensive use of monetary policy tools such as open market operations and deposit reserve ratio, rationally arrange policy instrument combinations, term structure and operation intensity, strengthen liquidity management, maintain a reasonable and moderate liquidity in the banking system, and promote moderate growth in monetary credit.

The report proposes that we should combine the total regulation of monetary credit and liquidity management with the strengthening of macro Prudential Management, make appropriate adjustments according to the macroeconomic situation and the stability of the banking system, continue to implement the dynamic adjustment measures of differential reserves, guide and encourage financial institutions to maintain stability and adjust their credit supply, and enhance the risk prevention ability of financial institutions.

We should further strengthen systemic risk prevention.

Continue to strengthen the risk management of local financing platform company loans, off balance sheet assets and real estate finance.

The central bank said that it is necessary to continue to cultivate the benchmark interest rate of money market, and guide financial institutions to further enhance the risk pricing ability. In accordance with the overall requirements and basic conditions of the "12th Five-Year plan", we must advance the interest rate marketization reform step by step through the choice of financial institutions with hard constraints and the gradual liberalization of the prices of alternative financial products.

In terms of exchange rate policy, we should further improve the RMB exchange rate formation mechanism in accordance with the principle of initiative, controllability and gradualism, give play to the fundamental role of market supply and demand in the formation of exchange rate, adjust with reference to a basket of currencies, enhance exchange rate flexibility, maintain the basic stability of the RMB exchange rate at a reasonable and balanced level, and promote the basic balance of international payments.

We should accelerate the development of the foreign exchange market and promote the innovation of exchange rate risk management tools.

Expanding the use of RMB in cross-border trade and investment, and steadily widening the flow of RMB and reflux channels.

We will continue to deepen the reform of the foreign exchange management system and crack down on illegal capital inflows such as "hot money".