China's central bank, in a report reviewing financial and economic developments last year, said on Friday it would take forceful measures to curb inflation and enhance monitoring of cross-border capital flows. The report was prepared more than two months ago and was not a comment on the country's most recent economic performance, a bank official told Reuters.
In a summary of its annual Financial Stability Report, the People's Bank of China vowed to keep a close watch on international financial markets and to avoid big swings in asset prices. The central bank did not elaborate.
China's consumer inflation fell to 7.7 percent in May, well down from April, when it skirted a 12-year high at 8.5 percent. But quickening money supply growth and producer price inflation in May showed the central bank still has its work cut out in taming inflation. "We will apply forceful measures and prevent the overall price level from rising," the report said.
Aggressive monetary tightening by the central bank, in the form of a 1 percentage point reserve ratio increase, triggered the steepest weekly drop in Chinese stocks this week, as the main index tumbled 13.9 percent.