Ba: International oil prices will remain high boost CPI

Severe tightening in January and February the fact that in March the tone has not been extended, especially from the perspective of the money supply so

there signs of loose monetary conditions, superimposed on the external influences, resulting in a slowdown in aggregate demand but not on schedule continued

Remain high, inflation fell less than expected phenomenon, which will inevitably lead to policy tightening to control inflation extension of access to "extra

time" while 5% of the price level may be continued through the third quarter. 
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Released from a quarter to see the data were analyzed, the impact of external events to some extent the instability in China's tight monetary and credit

policy intensity, pace and have a pronounced effect, prompting policy makers in fact set aside tighten

Buffer space, in March tightening monetary conditions have been relaxed tone of the next fact. In hindsight, the relaxation produced the following two

results exceeded market expectations: GDP fell slightly, down less than expected, CPI inflation rate has rebounded.

First, in the first quarter GDP growth of 9.7%, 9.8% higher than last year's fourth quarter growth eased only slightly. From the structural analysis,

endogenous economic growth momentum and gradually strengthened, and even the first half of the year, economic stagflation, or "hard landing" the possibility

is very small

. Second, the March CPI increase of 5.4% year on year. Although the new price factor fell 0.2 percentage points qoq, but the magnitude is far lower than the

comparable period in history down range. More importantly, triggering March CPI factors than-expected core non-food 
CPI, which means that the money supply, bank credit and real economic growth, upward pressure on inflation could rebound in an important impetus for

increasing one.

Looking to the future of the price situation, the international crude oil prices on the CPI's role in promoting a lag effect, the second quarter is expected

to be presented will gradually become the successor of food prices, pushed the CPI to maintain the boost power at high one.

On the other hand, changes in economic structure from the whole trend, along with the progressive Lewis turning point is approaching, is gradually rising

labor costs, the continued advance of urbanization, the international economy also led to a series of changes in face of China's development

Clinical environment, and high resource prices higher supply chain costs, which would make the Chinese economy than the level of the overall CPI will

gradually emerged since the reform and opening up the median uplift trend.

Domestic policy constraints facing the current environment is: First, GDP fell a limited extent, to dispel the rising inflation, real economic environment

will continue tightening policy to curb the excessive expansion of aggregate demand, the main tone; Second, CPI rise of new Price 

Factors will gradually switch to non-food prices and external factors, rising inflation, monetary policy must be to eliminate the monetary conditions. In

this context, a variety of policy mix to be selective in the use of the second quarter.

The first comprehensive use of the "three rate" that the deposit reserve ratio, interest rates and exchange rates and other price and quantity instruments,

and further improve the RMB exchange rate formation mechanism, enhance the RMB exchange rate flexibility, elimination of inflationary monetary conditions.

From a policy tool