CHINA can't be "blindly optimistic" about its inflation outlook at a time when uncertainties remain in areas such as property and farm produce prices, the central bank said.

China will continue to pursue a prudent monetary policy to keep prices stable, the People's Bank of China said in its first-quarter monetary policy implementation report yesterday. The PBOC will also further promote interest-rate liberalization and reform of the yuan's exchange rate, the report said.

Moves to loosen government control over utilities and resources may also lead to higher inflation later in the year, the PBOC said. Food prices rose 4 percent in April from a year earlier, compared with 2.7 percent in March.

(Bloomberg News)