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Beijing (AFP) Nov 2, 2010 China's central bank said Tuesday it would move away from policies aimed at countering the global financial crisis and further tighten control over credit in the face of increased capital inflows. The announcement by the People's Bank of China comes after the bank raised its benchmark one-year lending and deposit rates last month, the first rate hikes in nearly three years. The central bank "will gradually normalise the monetary policy from its counter-crisis mode and tighten control over liquidity to maintain moderate credit growth in the coming months of this year," the bank said in a statement on its website. The central bank will "gradually implement market-orientated reform of interest rates and keep the RMB (yuan) exchange rate basically stable," it added. On October 19, the bank raised the one-year yuan lending rate to 5.56 percent from 5.31 percent, and the one-year yuan deposit rate to 2.5 percent from 2.25 percent. The widely anticipated move came amid growing concerns that the booming real estate sector could overheat and derail the Asian powerhouse, despite government efforts to curb soaring property prices and rein in bank lending. The bank said Tuesday that uncertainties about price trends were increasing and capital inflows would increase as developed economies recovered from the financial crisis. "The international economic recovery is still relatively slow, China's economy is growing rapidly, and inflation expectations and the upward pressure on prices cannot be ignored," it said. China has implemented a moderately loose monetary policy over the past two years amid the global economic downturn.
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