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Reuters
IMF urges China to further tighten monetary policy
Thursday August 24, 11:42 am ET
WASHINGTON (Reuters) - China's economic policies are still not sufficiently tight to curb credit growth, an International Monetary Fund spokesman said on Thursday, urging Beijing to further tighten monetary policy.
"Additional monetary tightening would drain liquidity from the banking system and guard against continued rapid growth," IMF spokesman David Hawley said at a regular news briefing.
"The Chinese authorities have taken important steps to slow credit and fixed-investment growth to more sustainable levels. However, economic activity remains strong, driven by net exports and investment, while inflation is low," Hawley added.
China hiked interest rates on August 18 for the second time in four months to cool booming credit and investment that the central bank said posed problems for the economy.
The People's Bank of China ordered an increase of 0.27 percentage point in commercial banks' benchmark one-year deposit and lending rates. The deposit rate is now 2.52 percent and the lending rate stands at 6.12 percent.
The bank raised lending rates by the same margin on April 27 but kept deposit rates unchanged.
Growth in the world's fourth-largest economy quickened to 11.3 percent in the second quarter from a year earlier, the fastest pace in a decade, compared with 10.3 percent for the previous quarter.