KUALA LUMPUR: The Organisation for Economic Cooperation and Development (OECD) on Monday, June 21 said it welcomes the announcement by the Chinese authorities of an increase in exchange rate flexibility.
Even though more information is required to fully understand the measures that will be taken, the OECD considers that a gradual appreciation of the exchange rate will help mitigate domestic inflationary pressures in China, while making monetary policy more effective, it said.
It also will help boost household consumption and reinforce the sustainability of growth in China, the OECD said in a statement Monday.
Such a shift would be further strengthened by stepping up the ongoing reforms of pensions and health care insurance, which would reduce the need for precautionary household saving, it said. ''
Pushing ahead with financial market reform can work in the same direction, and also help put a lid on corporate over-saving by giving smaller firms better access to credit, said the OECD.
"A combination of sustained fiscal expansion, continued structural reform and exchange rate flexibility, should provide a strong contribution from China to the achievement of a strong, sustained and balanced growth of the world economy," said OECD secretary-general Angel Gurr''a.
Even though more information is required to fully understand the measures that will be taken, the OECD considers that a gradual appreciation of the exchange rate will help mitigate domestic inflationary pressures in China, while making monetary policy more effective, it said.
It also will help boost household consumption and reinforce the sustainability of growth in China, the OECD said in a statement Monday.
Such a shift would be further strengthened by stepping up the ongoing reforms of pensions and health care insurance, which would reduce the need for precautionary household saving, it said. ''
Pushing ahead with financial market reform can work in the same direction, and also help put a lid on corporate over-saving by giving smaller firms better access to credit, said the OECD.
"A combination of sustained fiscal expansion, continued structural reform and exchange rate flexibility, should provide a strong contribution from China to the achievement of a strong, sustained and balanced growth of the world economy," said OECD secretary-general Angel Gurr''a.
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