Central bank signals willingness for further monetary tightening

China is open to the possibility of using more interest rate and reserve requirement ratio increases to keep a lid on the country’s inflation, a new article argues in the official newspaper of the People’s Bank of China (PBoC), Reuters reported. The Financial News commentary wrote that “current monetary conditions remain loose … therefore, properly using reserve rate requirements and open market operations to further manage liquidity in the banking system … will effectively reduce the basic supply of money for society as a whole.” The article reinforces similar comments made by PBoC officials of maintaining a “prudent” monetary policy for the rest of the year. China’s monetary authorities have struggled to dampen the country’s rising inflation, which hit a three-year high of 6.4% in June.