BEIJING, May 31 -- The U.S. Federal Reserve's
interest rate cuts have helped increase liquidity, but have also led to rising
prices in commodities, Zhou Xiaochuan, governor of the People's Bank of China,
said on Friday.
The central bank governor said this has affected the
anti-inflation policies of emerging markets.
Zhou was speaking at a conference following the
release of a report by the Commission on Growth and Development, an
international organization that focuses on policy consultation in emerging
markets, and provides reference for aid programs.
"The U.S. Fed has significantly reduced interest
rates on the other hand, global commodity market prices have risen. A lot of
developing countries are now suffering from rising inflation," Zhou said.
The central banks of the world should cooperate more
closely to tackle the inflation problem, he said.
On another issue, he said experts may have
exaggerated the amount of "hot money" which has flowed into China.
"I've always held that it is not a comprehensive
approach to simply look at trade surplus and FDI (if you calculate speculative
capital inflows) you have to make a comprehensive check of the overall
international balance of payments," he said.
Hot money, which triggered the Asian financial crisis
in 1997, is being carefully watched in China, especially with the appreciation
of the yuan and high inflation.
China's reserves, the world's largest, have increased
rapidly this year. By the end of March, the reserves stood at 1.68 trillion U.S.
dollars, increasing by 154 billion follars in the first quarter.
During the same period, China's trade surplus was
41.4 billion dollars while the FDI was 27.4 billion dollars. Many analysts
suspect the 85 billion dollars gap was hot money that flowed into China in
anticipation of the yuan appreciating.
In April, the stockpile grew by a further 74.46
billion dollars, with the total reserves swelling to 1.76 trillion dollars, a
Reuters report said, citing a source familiar with the data.
The increase in the reserves in April was about 50
billion dollars, more than the total of China's trade surplus of 16.7 billion
dollars plus FDI of 7.6 billion dollars.
However, Zhou said many of the various accounts in
the country's balance of payments could contribute to the expanding foreign
exchange reserves.
"For example, we also have services trade and income
on the current account (that affects the level of the reserves). And the
financial markets are increasingly more sophisticated now," Zhou said, referring
to the complicated currency derivatives that can affect the level of foreign
exchange reserves.
WASHINGTON, May 29 (Xinhua) -- The U.S. Federal Reserve
announced Thursday that the amount of money it will auction to commercial banks
in June will be raised to 225 billion dollars from 150 billion in May as part of
its ongoing effort to ease credit crisis.
The Fed said it will conduct three auctions through its
Term Auction Facility (TAF) next months, with each one offering 75 billion
dollars in short-term cash loans. Banks can bid for a slice of the available
funds. Full story
WASHINGTON, May 21 (Xinhua) -- The U.S. Federal
Reserve cut its projection for the nation's economic growth this year on
Wednesday but signaled it would not be inclined to cut interest rates
further.
The central bank now forecasts that the economy will
grow at a pace between just 0.3 percent to 1.2 percent in 2008, lower than its
prior estimate of 1.3 percent to 2.1 percent growth for the year. Full story
WASHINGTON, May 29 (Xinhua) -- The U.S. economy grew
at an annual rate of 0.9 percent in the first quarter of this year, faster than
the 0.6 percent pace estimated a month ago, the Commerce Department reported
Thursday.
The first-quarter growth rate for gross domestic
product (GDP) followed growth paces of 0.6 percent in the final three months of
2007 and 4.9 percent in the third quarter of last year. Full story
