CHINA will become extremely cautious in raising interest rates in order to prevent hot money inflows and to control the pace of yuan appreciation, Zhang Monan, a researcher with the State Information Center, wrote in a commentary published in China Securities Journal yesterday.
China may be forced to abandon its independent interest rate policy stance as it faces a slew of challenges such as inflation, rapidly rising asset prices and capital inflows, Zhang wrote. The nation is expected to stick to a monetary policy that can be dynamically fine-tuned for quite a long period in the future, Zhang wrote.
Excess liquidity resulting from quantitative monetary easing in major economies is set to pose an increasingly grimmer challenge to China s economy in the next few years, Zhang said. The State Information Center is a researcher under the National Development and Reform Commission.(SD-Agencies)
