(4 December 2010 – China) In effort to curb inflation and rapid growth, China’s leadership has called for tighter control over bank lending and other spending for the coming year.The government’s Xinhua News Agency said that the ruling communist party has ordered a switch in monetary policy “from relatively loose to prudent”.
The change of direction is needed after the government and banks overwhelmed the markets in 2009 with easy money to ward of the global economic crisis.
Monetary policy regulator’s raised interest rates in October this year, highlighting its divergence from the United States and other major economies.
The central bank said in its latest quarterly report it would ‘gradually return policy to a normal position,’ indicating interest rates would rise.
The government is trying to cool inflation that spiked to 4.4 percent in October – driven by food costs jumping more than 10 percent – and well above the official 3 percent target.