In the evening, the people's Bank of China announced that the deposit reserve ratio of commercial banks should be raised to 50 basis points to 16%.

In this regard, Chinese and foreign institutions are not surprised. They expect the central bank to continue to maintain a tight policy stance and continue to manage liquidity through open market operations.

China's economic trend in the first quarter is in line with the judgement of "external cold and internal heat".

The growth rate of consumption in nominal terms has reached a new high, the actual growth rate is steady, and the investment in fixed assets has remained high; the snowstorm and imported inflation are pushing up CPI and PPI, and the profits of enterprises will be further squeezed.

Maintain the annual CPI may reach 6.5- 7%, but before the high and low judgement.

In view of the adjustment of GDP by the statistical bureau, the GDP growth rate in 2008 is forecast to 10.5%.

China's economic growth dropped significantly in the first quarter, but slightly higher than previous market expectations. The extent of this fall is related to the adjustment of the base period and deserves further attention.

At present, the rising inflation level and the sharp fall in economic growth are largely due to the supply shocks caused by the sharp rise in commodity and labor costs.

In addition, it is also related to the shortage of supply.

Considering the development of these factors, inflation pressure is likely to further intensify in the short term, and economic growth may be at a low level.

On this basis, CPI inflation is expected to remain at around 8% in the two quarter, with an economic growth rate of about 10.7%.

Under the combined influence of multiple factors, China's economic growth rate is still 10.6%, obviously better than expected.

First, under the circumstances of the snowstorm and the slowdown in the US and Europe and the decline in export growth, our economy has maintained a relatively fast growth. This shows that the power and vitality of China's economic growth is still strong, and the economy is expected to maintain a relatively fast growth over a long period of time.

Two, investment and consumption continue to grow rapidly, and the risk of economic growth from overheating to overheating still exists.

The three is the main source of current inflationary pressure. The excessive demand for economic resources exceeds the supply caused by excessive economic growth, and the actual growth rate exceeds the potential growth rate.

To control price increases and reduce inflationary pressures, we must further curb investment and consumption growth, and there is still room for macroeconomic regulation and control.

Galaxy Securities believes that there is a need for further tightening of macroeconomic regulation and control, and monetary policy tightening may be further intensified.

In March, the CPI growth rate dropped to 8.3%, lower than the 8.7% level in February.

However, inflation pressure has not subsided, and CPI growth is likely to rebound in the coming months.

Meanwhile, in March, the ex factory price index of industrial products increased further from 6.6% in February to 8%, and the growth rate of the industrial chain increased from 12.2% to 12.5%.

Goldman Sachs said that despite the slowdown in GDP growth in the first quarter and the decline in inflation in March, it is necessary for the government to maintain a tight policy stance to stabilize inflation expectations.

It is still too early to say that inflation suppression is successful, especially in the case of large inflow of foreign exchange capital and continued expansion of domestic credit.

It is expected that the government will continue to strictly control lending, allow the renminbi to accelerate appreciation, and further recover liquidity through open market operations and frequent increase in the deposit reserve ratio.

In view of the high inflation risk, it is expected to raise interest rates two times (27 basis points) each year.

Real GDP growth in the first quarter dropped from 10.6% in the fourth quarter of 2007 to 10.6%, higher than expected.

Although the snow disaster in 1-2 hit 21 provinces and cities in 31 provinces and cities in China, the trade surplus in the first quarter narrowed (-11% year-on-year, compared with +12% in the fourth quarter of last year), but the actual GDP in the first quarter still maintained two digit growth, indicating that the potential growth of domestic investment and consumption remained strong.

GDP growth is expected to increase from 9.5% to 9.8% in 2008.

However, China's GDP growth rate has peaked in the second quarter of 2007, and now it has entered a period of periodic deceleration caused by exports.

After the snowstorm and the Spring Festival effect, the fall in meat and vegetable prices contributed to the fall in inflation.

Although inflation pressure is expected to remain at a high level in the first half of 2008, the fall in CPI inflation in March should reduce the probability of immediate rate hike (it is not expected to raise interest rates in 2008).

However, in view of the rapid growth of China's foreign exchange reserves (an increase of 154 billion US dollars in the first quarter), the deposit reserve rate will be raised by 50 basis points in April.

However, due to the disturbance of snow disaster, it is difficult to measure the potential strength of the economy at present.

Data in March indicate that the fear of investment rebound is not yet completely eliminated.

This makes the government more puzzled when deciding whether or not to change its tightening policy.

The government should adopt a more cautious and comprehensive attitude to avoid the ups and downs of policies.

At least, the need for more aggressive austerity in the near future has been reduced.