Report: China to tighten monetary policy in 2011

http://www.star-telegram.com/2010/12/03/2676419/report-china-to-tighten-monetary.html

This is the clearest statement yet from Politburo!  No one seems to have noticed this, but its key change in policy and underlines the need for tighter monetary policy in China.

Note the text: The ruling Communist Party's top body, the Politburo, ordered the switch in monetary policy "from relatively loose to prudent," the government's Xinhua News Agency said.

US 10 years takes out 3.00 now critical 3.15 pc the final barrier. My model is short, but today's Non-farm payroll will decide this week range, overall I expect break of 3.15. (note also how higher mortgage rates already having negative impact: http://goo.gl/r37L0

Trichet is reduced to "sneak in from behind" and do big tranches of support buying. His problem: Limited capital & Bundesbank in control ECB push to gain control

Full text China story

port: China to tighten monetary policy in 2011

The Associated Press

BEIJING — China's leadership called Friday for tighter control over bank lending andother spending next year, a shift in economic policy as Beijing tries to cool inflation and guide rapid growth to a sustainable level.

The ruling Communist Party's top body, the Politburo, ordered the switch in monetary policy "from relatively loose to prudent," the government's Xinhua News Agency said.

The announcement continues a change in direction charted this year of modest tightening after the government and banks flooded the economy with easy money to ward off the global economic crisis in 2009.

Beijing raised interest rates Oct. 19, highlighting its divergence from the United States and other major economies, which still are focused on shoring up growth.

Analysts expect more rate hikes in coming months as Beijing restores normal financial conditions and clamps down on a building and credit boom. Chinese stock markets have fallen in recent weeks as investors watch for a rate hike, worried it might slow growth or choke off credit that is helping to support stock prices.

Chinese regulators also have tried to rein in credit by forcing banks to hold back more money as reserves and tighten lending standards.

Economic growth eased to 9.6 percent in the three months ended September after hitting a post-crisis peak of 11.9 percent in the first quarter of this year. Private sector analysts expect full-year growth up to 10 percent.

Inflation spiked to 4.4 percent in October, driven by a 10.1 percent jump in food costs, and some analysts say it could rise still further in November.

The government has launched efforts to increase supplies of vegetables and other basic goods and is cracking down on hoarding and speculation that it says are partly to blame for the price rises.