The report estimates that in 2012 the benchmark interest rate will remain stable, but possibility cannot be excluded that the interest rate is reduced once for 0.25 percentage points for severe external impact. The reserve requirement ratio may be lowered two to four times, 0.5 percentage points each time. Possibility also cannot be excluded that the reserve requirement ratio will be lowered more frequently because of massive withdrawal of capital from China.

Zheng Xinli, Permanent Vice President of China Center for International Economic Exchange, said to curb prices and stabilize economic growth, China must change the measures of curbing inflation by merely tightening money supplies in the first three quarters of 2011. Instead, the government should curb inflation by increasing supplies, especially to balance the production and demand.

Ding Maozhan, Deputy Director of the Research Office of the Chinese Academy of Governance, suggested China adopt several measures this year to curb inflation. First, a prudent monetary policy should continue and money supply should never be loosened. With this keynote, micro adjustments can be made at a proper time to stabilize economic growth. Second, agricultural production should be stressed to ensure stable growth of output of grain and other farm and sideline products. Third, preparations should be made to cope with serious natural disasters in order to prevent short supplies caused by disasters. Fourth, when issuing reform measures, the government should prevent steep rise of resource prices and labor costs that may push up inflation.

Central bank governor Zhou Xiaochuan told the media that price pressure will ease this year, but the regulation against rapid price hike should never be relaxed and inflation expectations should be reasonably managed.

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