China has room to tighten monetary policy as stimulus measures to support the pandemic-hit economy have been curtailed and consumer inflation remains under control, a central bank spokesman said on Friday.

China will continue to improve and deploy its various monetary policy tools to support the economy and maintain reasonably ample liquidity, Ruan Jianhong, a spokesman for the People’s Bank of China, told a finance forum in Beijing.

“Since the start of the pandemic, China adopted normal monetary policy instead of excessive stimulus, leaving room for further monetary policy adjustments,” Ruan said.

China’s relatively stable consumer inflation will help create sound conditions for monetary policy changes, he said.

He added that China will pay close attention to inflation at home and abroad, avoid excessive stimulus and keep consumer prices basically stable.

The recovery in the world’s second-largest economy is at risk of fading amid new coronavirus outbreaks and a struggling real estate sector.

Signs of pressure are beginning to appear on consumer prices, which have long been benign in China. The consumer price index in July rose 2.7% from a year earlier, the fastest pace since July 2020, even though activity has cooled.

The government said it will publish the detailed steps of the newly announced economic policy measures in early September, suggesting an urgency for policymakers to revive the sluggish economy as recent factory activity surveys pointed to to a further loss of momentum in the economy in August.

China last week cut its benchmark lending rate and lowered its mortgage rate by a larger margin, as Beijing stepped up efforts to revive the crisis-ravaged economy.

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