2017.04.2618:44:00UTC+00Pboc Likely to Tighten Monetary Conditions Slightly in 2017, Inflation to Reach 2.2 Pct

The People�s Bank of China has committed to keep a �prudent� monetary policy stance this year, continuing to fine-tune monetary conditions with targeted policy measures. Deleveraging continues to be a main priority for China�s policymakers, while increased attention would be given to managing financial risks related to non-performing assets and high corporate leverage, bond defaults, shadow banking and the heated real estate market.
The Chinese central bank is likely to tighten monetary conditions a bit through the course of this year by hiking interest rates on its open-market operations, according to a Scotiabank research report. The seven-day reverse repo rate is currently at 2.45 percent following a 10-basis point hike in February and March.
However, the official benchmark rates are unlikely to be changed. The one-year loan and deposit rates have been maintained at 4.35 percent and 1.5 percent respectively, since October 2015. China�s consumer price inflation continues to be low. Consumer price inflation accelerated 0.9 percent year-on-year in March.
�We expect price gains to accelerate gradually over the coming months, with inflation closing 2017 at 2.2 percent y/y�, added Scotiabank.