People's Bank of China sounds alarm over inflationary pressures
Monetary easing abroad may put extra inflationary pressure on a recovering mainland economy, the People's Bank of China warns
The mainland economy, already showing signs of recovery, will face inflation pressure as it falls victim to monetary easing by foreign countries, the central bank said yesterday.
The People's Bank of China said in its fourth-quarter monetary report that it would give priority to taming inflation, as its monetary policies attempt to achieve sustainable growth.
"Close attention must be paid to the risks from potential imported inflation amid the major economies' stepped-up implementations of monetary easing," the report said.
The warning, published one day before the official releases of China's consumer price index (CPI) and producer price index (PPI) for January, underscores concerns about the quality and sustainability of a recovery.
The mainland's service sector recorded the fastest growth since August last month as the non-manufacturing purchasing managers' index (PMI) hit 56.2, according to the National Bureau of Statistics. A reading above 50 indicates an expansion of business activities.
However, inflation worries still weigh on businesses executives and equity investors, who have yet to be convinced of a solid mainland economic rebound.
The mainland's gross domestic product expanded 7.8 per cent in 2012, 1.5 percentage points lower than the previous year.
