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The People's Bank of China is worried about inflation but will maintain its moderately loose policy in the second half to provide adequate liquidity in support of economic growth, a central bank official told Caijing.
The official, who declined to be identified, said inflation, not deflation, is the focus of the bank's concern, even though the Consumer Price Index fell 1.7 percent in June, contracting for the fifth straight month. The Producer Price Index fell 7.8 percent last month, the seventh consecutive fall.
The central bank held a semi-annual conference on July 19 and 20 to set targets for the second half of the year.
Though the indicators are still showing deflationary conditions in the wake of the economic collapse of 2008, inflation fears have been fueled by the liquidity the government has since pumped into the system. Much of that liquidity is believed to have been captured by the stock and property markets, raising the prospect of an asset bubble. |
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