China must be vigilant on inflation -PBOC official

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BEIJING, Sept 27 (Reuters) The People's Bank of China needs to be proactive in tackling inflation and keep ahead of the investors' expectations for policy tightening, a senior central bank official said on Thursday.

Jing Xuecheng, deputy director of the PBOC's research bureau, said the central bank had duly stepped up the pace of tightening in response to a rise in inflation, which jumped to a 10-year high of 6.5 percent in the year to August.

''We should rather take the problem more seriously than playing it down,'' he told a financial forum.

Some economists, by contrast, see little risk of broad-based inflation because the recent leap in consumer prices has been purely due to a spike in the cost of food, especially pork.

But Jing said asset prices were also rising, due to excess liquidity pouring into the economy from China's trade surplus, which was generating plenty of cash for investment.

''We are now facing high property prices, high stock prices and the CPI is also relatively high,'' he said.

Jing said he did not know whether inflation would accelerate further in September.

REUTERS PBB PM1155

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