“China’s central bank signaled concern that inflation risks will increase and said that monetary easing by nations, including the U.S. and Japan, may push up commodity prices and make global capital flows more volatile.
China must be alert to changes in price-gain expectations and to imported inflation, the People’s Bank of China said yesterday in its fourth-quarter monetary policy report. The costs of labor-intensive products, services and agricultural goods may rise persistently on slowing labor-supply growth, the PBOC said.
“An economic recovery and demand expansion may pass into CPI in a relatively fast manner,” the central bank said.
Chinese officials are trying to sustain a rebound in growth without spurring a pickup in consumer or home prices as the Communist Party completes a once-a-decade power handover. Expansion in gross domestic product accelerated in the final three months of last year for the first time in two years.
“The central bank is signaling that room for further monetary easing is quite limited,” said Chang Jian, a Hong Kong-based economist at Barclays Plc who formerly worked for the World Bank. “But it will remain flexible to accommodate the expected crackdown on shadow banking and stricter regulation of local government financing to produce a liquidity situation that is supportive of growth.”
The Shanghai Composite Index, the nation’s benchmark stock gauge, dropped 1.3 percent at the 11:30 a.m. local-time break, headed for the first decline in nine days.
Easing Pause…”
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