China inflation rate hits 7-month low, eases tightening fears

BEIJING: China's annual consumer inflation slowed more sharply than expected to a seven-month low of 2.5% in December, easing market fears of tighter monetary policy rates although the central bank is tapping the brakes on bank liquidity.

Rising money market rates and bond yields indicate the People's Bank of China (PBoC) is tightening liquidity conditions, to reduce debt levels and contain credit growth, but there is little sign of a sharp turnaround in its policy stance.