Dec 9 (Reuters) - China's central bank needs to further raise banks' reserve requirements and issue more bills next year to mop up excessive liquidity, a former deputy central bank governor said in remarks published on Thursday.
Wu Xiaoling, who is now a senior lawmaker, said China must ratchet up efforts to shield the economy from speculative money inflows fanned by monetary policy easing in the United States.
"The priority is to increase the sterilisation to reduce the impact from global speculation capital on China's real economy," Wu was quoted by the 21st Century Business Herald as saying.
The country's top leadership has announced a shift in its monetary stance to "prudent" away from "appropriately loose".
Although the reserve requirement ratio had hit a record high of 18.5 percent now after five increases so far this year, Wu said there was still room for further rises.
Speculation about an interest rate rise in the coming days has intensified after an official newspaper flagged the chances of an imminent move amid expectations of rising inflation in November. [ID:nTOE6B602F]
A common way to set the annual broad money supply target was to add one or two more basis points to the country's estimated GDP growth rate plus consumer inflation, Wu said.
China would be biased towards the lower end when setting its annual target for money supply growth next year, she added.
The newspaper said there was market consensus that China would control broad money supply growth at around 15 percent and new lending at 7 trillion yuan for 2011, down from this year's target of 17 percent and 7.5 trillion yuan, respectively.
