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Chinese bank expects inflation to peak in 2009


BEIJING, July 7 (Xinhua) -- China's inflation is to peak in 2009 and then fall, according to the Industrial and Commercial Bank of China (ICBC) in a report on Monday.

    The report by China's largest lender said the assets prices would gradually rise in the next three years. However the stock markets would continue to suffer significant uncertainties, resulting in their seesawing during 2010 and 2011. After that prices would again rise.

    During the 2009-2011 period, liquidity would remain abundant with the M2 supply rising rather rapidly, but the possibilities of temporary liquidity shortfalls would increase, said the report.

    The report forecast that there would be little probability of drastic economic fluctuations in the next three years as the economy would be backed up by increasing domestic demand, positive macro controls and ameliorating overseas conditions.

    The major task of China's economic control remained curbing inflation and reducing risks of serious economic fluctuations, said the report.

    Inflation jumped in mid-2007 as the nation ran short of pork, grain and other food items.

    Consumer prices rose 7.7 percent in May over the same month last year. That was a slight decline from April's 8.5 percent rate but well above the government target of 4.8 percent for this year. Inflation in February reached a 12-year high of 8.7 percent.