Multiple goals of monetary policy

Chinese central bank governor Zhou Xiaochuan said monetary policy should be made to meet multiple objectives rather than focus only on fighting inflation. He made the comments on Tuesday at an economic forum in Beijing.

Zhou Xiaochuan said China's monetary policy covered four considerations: low inflation, economic growth, employment, and balance of international payments. He said given the complexity of the economic situation, more monetary measures will be used if necessary. He added that reserve ratios for lenders remains an important tool, fueling speculation that requirements may be increased to limit the risk of asset bubbles.

Zhou Xiaochuan pointed out that as China undergoes economic reform and transition, market-oriented levels are relatively low, so the actual operation mechanism of monetary policy is different from that of developed countries and other emerging markets. He said monetary policy will consider the optimal use of resources and leave space for adjustment while making policies.

Zhou Xiaochuan also said that intervention by the central bank in capital markets is unrealistic, and its policies will focus on easing the pain after the bubble bursts.