China says U.S. likely to launch QE III easing

The United States could launch a new round of quantitative monetary easing, China's top economic planner said on Wednesday in a statement addressing the country's future inflation risks.

Reiterating recent comments that China's inflation may have peaked, the National Development and Reform Commission also noted that the Federal Reserve may buy more U.S. Treasuries, but it did not say why it thought that is likely.

Overall prices are expected to ease in coming months, the agency said. Still, it noted that inflation dangers remained, including possible U.S. policy easing.

The United States has approved the plan to raise its debt ceiling by $2.4 trillion. To repay debts and to drive economic growth, there is a high possibility that the Fed may launch a third round of quantitative easing, the agency said.

If the United States implements further easing, it may push up commodity prices and that translates into higher imported inflation (for China), it said.

The comments came just hours after the Fed took the unprecedented step of vowing to keep interest rates near zero for at least two more years.

It also said it would consider further steps to help foster U.S. economic growth, adding to market speculation the central bank may buy more U.S. government bonds or launch a new round of quantitative easing, also known as QE III.

Beijing has never suggested that it is privy to the Fed's internal discussions or plans.

But it made plain its unhappiness when the Fed unveiled QE II in November, accusing the United States of exporting inflationary pressures around the world, a line it repeated on Wednesday.

(A new round of easing) may also trigger more hot money inflows into developing countries, including China. The increase in speculative funds would make it more difficult to control our prices, the commission said.

The Fed's rationale for its last round of bond purchases was to ward off the risk of deflation, which does not appear to pose a serious threat now. That argues against another round of bond-buying now.

But a Reuters poll of dealers found that 37.5 percent of respondents polled on Tuesday expected the Fed to resume bond-buying within the next six months, up from 27.5 percent who had expected the move when they were polled on Friday.

(Reporting by Zhou Xin and Koh Gui Qing; Editing by Ken Wills)