Last year, the central bank raised the reserve ratio 10 times and interest rates six times to mop up excess liquidity.

The reserve ratio has so far been raised once this year; and economists expect further interest rate hikes.

Zhou said there is room for an interest rate increase, but domestic and international factors need to be taken into account.

He said the recent fall of US interest rates did affect China, but only partially. "China has many domestic factors to consider in interest rate revisions."

Zhou cited the influence of the domestic capital market and consumption, as the country is increasingly dependent on stimulating domestic demand, rather than exports, to spur economic growth.

Successive interest rate cuts by the US Federal Reserve to rev up the economy have widened the China-US interest rate spread and helped push down the US currency.

Some analysts said the central bank now had limited room to raise rates further and had to let the yuan rise to curb inflation.

(China Daily March 7, 2008)