Tuesday July 7, 09:51 AM
UPDATE 1-China's Wen, advisers wary of inflation-source
BEIJING, July 7 (Reuters) - Chinese Premier Wen Jiabao and his economic advisers agreed at a recent meeting that Beijing would stick to its moderately easy monetary policy stance in coming months, an informed source told Reuters on Tuesday.
The source said Wen and economists who attended the meeting also agreed to pay more attention to inflation expectations.
'The appropriately relaxed monetary policy stance should not change, but the central bank has to send signals to show that the authorities are paying more attention to inflation expectations,' the source, who took part in the meeting and asked not to be named, told Reuters.
Prices in China have been falling at the consumer and producer level for several months, but the source said a lending spree at home and excessive liquidity globally were intensifying concerns that inflation might revive. Beijing's future policy course needed to take this into account, the source said.
Banking sources told Reuters that new lending in June exceeded 1.3 trillion yuan ($190.2 billion), almost double the May total of 664.5 billion yuan.
An official with the China Banking Regulatory Commission warned that China's massive infrastructure lending is posing increasing risks for the banking system.
The source who was at the meeting with Wen said China would nevertheless maintain an easy monetary stance and active fiscal policy because external demand was likely to remain weak for the next two or three years.
Wen and his advisers agreed that, with the economy on the path to recovery, future policies would focus more on addressing medium-term structural problems to ensure sustainable growth.
A Reuters poll published on Tuesday showed that the economy probably grew by 7.5 percent in the second quarter from a year earlier, quickening from the 6.1 percent pace of the first quarter.
(Reporting by Reuters newsroom; Editing by Alan Wheatley)
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