China c.bank chief sees room to raise rates -paper

China still has room to raise interest rates and banks' reserve requirements if necessary, central bank governor Zhou Xiaochuan said in remarks published on Monday.

"The central bank must balance the merits and demerits, while choosing the most suitable monetary policy tools, and adequately consider the timing and extent of any (policy) adjustments," the official China Securities Journal reported Zhou as saying.

The People's Bank of China raised interest rates six times and required reserves 10 times in 2007. So far this year it has kept rates steady and increased the reserve requirement once.

He was speaking on the sidelines of the National People's Congress meeting in Beijing.

Asked whether there would be another revaluation of the yuan, Zhou declined comment, saying it was a matter for the market.

The central bank, which revalued the yuan by 2.1 percent against the dollar in July 2005, has let the currency rise more swiftly in recent weeks as part of a tighter monetary policy to tackle inflation, which is at an 11-year high of 8.7 percent.

Zhou welcomed last week's monetary data for February, which showed a slowdown in both M2 money supply and credit growth.

But he said the central bank could not jump to conclusions because the timing of the Lunar New Year and fierce winter weather had influenced economic decisions.

He said he would wait and see whether the trend was sustained in March.