PBOC: Monetary tightening to contine in 2008

Beijing will persevere with its tight monetary policy this year, relying on currency, interest rate and money supply measures, the vice governor of the People’s Bank of China (PBOC) said at an economic forum on Sunday. Yi Gang stressed that the policy would remain in place "despite uncertain factors domestically and externally," referring to the recent snowstorms that hit China as well as the global fallout from the US subprime crisis. He added that inflation remained the biggest risk in China’s economy, Bloomberg reported. A PBOC monetary policy report, released on February 22, identified a more flexible yuan and interest rate adjustments as the most effective ways of curbing inflation. Interest rates went up six times in 2007, pushing the one-year lending rate to 7.47%, while the yuan gained 7% on the US dollar, twice as much as in 2006. Goldman Sachs expects a 12% gain against the dollar this year.