* C. bank reaffirms "prudent" policy
* Says Chinese growth fast, in line with expectations
* Says global economy faces many uncertainties
(Adds comments from Premier Wen Jiabao)
By Kevin Yao and Aileen Wang
BEIJING, Sept 30 China will keep monetary
conditions tight in its effort to rein in stubborn inflation,
the country's central bank said on Friday, adding that
containing domestic price pressures remains its priority.
"We should continue to implement a prudent monetary policy
and continue to treat price stabilisation as the top priority,"
the People's Bank of China said in a statement following its
quarterly policy meeting.
The central bank said inflation remains high and that it
will use a mix of policy tools to keep liquidity in check, seen
by analysts as one of the root causes of price rises in the
world's second biggest economy.
The bank said monetary policy should be more targeted and
effective and said it would pay attention to its "strength and
"Our economy maintains stable and relatively fast growth.
Inflation pressures have eased, although they are still at a
high level," it said.
The bank also said the economy is moving in the "expected
direction", although the world economy faces many uncertainties.
China Premier Wen Jiabao echoed the central bank's
cautiously upbeat remarks on the growth outlook at home. In
comments carried by state radio, Wen said the Chinese economy is
still growing at a stable and relatively brisk pace.
Speaking at China's National Day celebrations, Wen also said
China has "effectively" contained rapid gains in consumer
As the world economy sputters amid mounting debt problems,
China has been holding off on further policy tightening --
though few analysts expect any meaningful policy easing in the
China's annual inflation pulled back to 6.2 percent in
August from a three-year high of 6.5 percent in July and is
widely expected to cool steadily for the rest of 2011.
Facing global headwinds, the country's manufacturing sector
contracted for a third consecutive month in September, the HSBC
purchasing managers index showed on Friday.
But plenty of cash continues to slosh around the economy and
food costs are still soaring, making it too early for Chinese
leaders to declare they have inflation under control.
Since last October, the central bank has raised interest
rates five times and banks' reserve requirement ratios -- the
percentage of cash deposits they must set aside in their vaults
-- nine times.
The central bank also reaffirmed its long-standing policy of
improving the yuan's mechanism to better reflect market forces
while keeping the exchange rate basically stable.
The yuan closed near its lowest daily trading
limit versus the dollar from the central bank's mid-point on
Friday after trading mostly at the limit during the session.
Analysts and traders say they do not expect to see China
changing its policy to let the yuan depreciate gradually.
(Reporting by Langi Chiang, Aileen Wang and Kevin Yao; Editing
by Don Durfee, John Stonestreet)