A growing number of economists believe that the global inflation has arrived and the China's monetary policy is facing an unprecedented challenge.

Ever since this year, a great number of countries including developed countries, emerging market countries, as well as the oil-exporting countries became worried about their domestic inflations. The rising of the major CPI kept above 2.3% from January to March in The United States. At the same time, the CPI has developed 3.6% in March in euro zone, creating a highest record. In Russia, the CPI has attainted 14.3% in April. Similarly, the inflations have reached the highest levels in South Korea, India, Indonesia, Singapore, The Philippines and other countries.

There are several reasons contribute to the global inflation. First of all, the excess liquidity has pushed higher the price. Secondly, consumption upgrade, the increase in population, energy commodities in particular shortages stimulated the rising of the commodities prices, especially of the agricultural products. Furthermore, with the subprime lending crisis, Federal Reserve Board reduced the interests rates and injected the liquidity, which intensified excess liquidity. And finally, the globalization has increased the developpment of the labor costs.

In May, the international oil prices break through 130 U.S. dollars / barrel, and the corn price has created a record high, which became the direct factors to push the pressures of the global inflation. Some experts have predicted that the average dollar-denominated cost of living will double within a few years.

The inflation has become the great headache of the central banks governors of each country around the world. The experts have pointed out that facing the global inflations, the central banks wouldn’t like to adopt tight monetary policy individually, which could sacrifice the development of their economy.

How China’s monetary policy facing the incoming of Global inflation with the complex international enviornment?

The experts predict, the effects of imported inflation to China for this year and the future  has increased; its duration as well as the scope may go beyond the expectation. Although CPI may show the trend of slowing down, but high inflation,  the threat of imported inflation in particular, can not be taken lightly. As far as the specific policies are concerned, many countries seek to unhook their own currencies form dollars, however, the tendency of the appreciation of Renmibi can’t be changed in a short term of time.

Moreover, the China’s monetary policy is restricted by that of the U.S. Federal Reserve. The regulation and control of currency should look for the international corporation. Last Friday, Mr. Zhou Xiaozhuan,the governor of China’s central bank, pointed out that the reduction of the interest rates and the injection of liquidity by the U.S. Federal Reserve have put pressure to the inflation of the emerging countries. The experts predict that, the global monetary policy of cooperation should concentrate on the interest policy. The continued depreciation of the dollar made China’s monetary policy prudent and search for the quantity tools to achieve the objective of tightening.

Last but not least, the monetary policy can’t be the only way to resolve this round of global inflation. All the countries around the world are searching for other policies to solve these problems such as the reinforcement of the coordination of the currency, finace, commerce, industry and the protection of the enviornment. China should bring into play other policies, especially the developpment of the agriculture production to improve supply and the increase of the allowance for the low-income.（China Securities Journal/Wang Dong-lin )