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Inflation rises to 2.4 pct in April(2)

2013-05-09 16:04 Xinhua     Web Editor: Gu Liping comment

Official data earlier this month showed China's Purchasing Managers' Index for the manufacturing sector fell to 50.6 percent in April from 50.9 percent in March. The sub-index for new orders edged down 0.6 percentage points from the previous month to 51.7 percent.

Given the weak growth activity and relatively subdued inflation, China may bend towards looser monetary policies to keep liquidity flowing to nurture the recovery, while proceeding with structural reforms to sustain long-term growth, Liu said.

The possibility of an interest rate cut within the year is on the rise, he projected.

But Lian Ping, an economist with the Bank of Communications, held that such a radical move is unlikely, as the current liquidity is ample enough to support growth and further significant easings may once again fan up property prices.

Besides, the central bank's sale of 10 billion yuan (1.6 billion U.S. dollars) of three-month bills on Thursday dampened the possibility of a rate cut, he noted.

Lu Zhengwei, chief economist at the China Industrial Bank, said instead of relying on reducing the interest rate or banks' reserve requirement ratio, the central bank will continue to adjust liquidity via open market operations.

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