Home>News Center>China
       
 

China may raise rates if inflation exceeds 5%
(Bloomberg)
Updated: 2004-05-18 10:13

China may need to raise interest rates to curb investment if the consumer price index climbs above 5 percent, said a central bank policy maker.

``If consumer prices become uncontrollable, that is rising above the bearable limit of 5 percent, China may have to raise interest rates,'' Li Yang, a member of the central bank's monetary policy committee, said Monday after a conference organized by CLSA Ltd. in the eastern port city of Qingdao.

The central bank is concerned that an inflation rate higher than the one-year lending rate, currently 5.31 percent, may exacerbate price rises by encouraging companies to borrow and stockpile materials for profit. China's inflation accelerated to a seven-year high of 3.8 percent last month.

The central bank is trying to curb money supply and credit growth to help cool spending in industries such as steel, cement and real estate. China's investment in factories, roads and other fixed assets jumped 43 percent in the first quarter.

The inflation rate may approach 5 percent in the three months starting in May because of last year's SARS epidemic, which depressed prices in the comparable months, central bank Vice Governor Wu Xiaoling said in an April 27 interview.

Money Supply

China is unlikely to raise interest rates in the next six months unless inflation accelerates further because an increase won't necessarily help to curb money supply, said Li, who's also director general of the Institute of Finance & Banking, a think- tank under the Chinese Academy of Social Sciences.

M2, China's broadest measure of money supply, grew 19 percent from a year earlier in April, exceeding the central bank's target for a 16th straight month, the bank said May 13.

``Unlike developed countries like the U.S., a rise in interest rates doesn't mean the money in circulation will drop,'' he said. ``In China there isn't a close relation between interest rates and money supply.''

The government is also reluctant to raise interest rates out of concern that a wider gap between yuan and dollar deposit rates would attract further overseas capital inflows, Li said. The one-year yuan deposit rate is 1.98 percent, against 0.95625 percent for a one-year dollar deposit in China. The one-year deposit rate in the U.S. is 1.06 percent.

Capital inflows help to fuel money supply growth because the central bank has to exchange dollars for yuan to support the Chinese currency's peg to the U.S. currency. China's foreign-exchange reserves, the world's second biggest after Japan's, rose to a record US$439.8 billion at the end of March.

China will wait for the U.S. to raise interest rates before doing the same because an earlier move would put pressure on the fixed currency link, Hong Kong Financial Secretary Henry Tang said in an interview on Monday.

The central bank's benchmark one-year lending rate was last raised in July 1995. The bank said last week it will keep monetary policy ``appropriately tight.''

 
  Today's Top News     Top China News
 

New pact to pipe Kazakh oil to China

 

   
 

Taiwan's attempt to access WHO fails again

 

   
 

China may raise rates if inflation exceeds 5%

 

   
 

Direct elections move to township level

 

   
 

Concern grows after forced evictions

 

   
 

Small firms have big impact in stock board

 

   
  Taiwan disputed votes rise to 35,000
   
  Taiwan's attempt to access WHO fails again
   
  Abducted boy, 12, makes it back home
   
  Curators call for efforts to protect heritage
   
  Workplace diseases threat to rural workers
   
  Small firms have big impact in stock board
   
 
  Go to Another Section  
 
 
  Story Tools  
   
  Related Stories  
   
Experts: China may raise interest rates
   
Interest rate rise depends on economic trend
   
China retains interest rates
   
Monetary growth may push up interest rate
   
Central bank to maintain RMB interest rate
   
No interest rate rise in sight
   
Experts: China may raise renminbi interest rate
  News Talk  
  When will china have direct elections?  
Advertisement
         
主站蜘蛛池模板: 国产日韩欧美成人| 嫣嫣是女大生韩漫免费看| 亚洲国产成人高清在线观看| 稚嫩娇小哭叫粗大撑破h| 国产丰满岳乱妇在线观看| 国产性夜夜夜春夜夜爽| 国产精品无码专区在线观看| a毛片成人免费全部播放| 性欧美大战久久久久久久野外| 久久棈精品久久久久久噜噜 | 国产99视频免费精品是看6| 国产a免费观看| 国产精品三级电影在线观看| 97视频精品全国在线观看| 女网址www女大全小| 中文在线观看www| 日日AV色欲香天天综合网| 久久精品免视看国产成人 | 国产丰满麻豆videossexhd| 91华人在线视频| 国产精品久久久久影视不卡| 68日本xxxⅹxxxxx18| 在线观看www成人影院| h视频免费观看| 婷婷综合激情网| 一级一片免费视频播放| 成人无码av一区二区| 中文字幕在线电影| 新梅金瓶2之爱奴国语| 久久66热这里只会有精品| 日本一道本高清免费| 久久久久波多野结衣高潮| 日本电影一区二区三区| 久久天天躁狠狠躁夜夜| 日韩a级毛片免费观看| 久久精品国产精品亚洲艾| 日韩欧美亚洲乱码中文字幕| 乱子伦xxxx| 日韩精品无码一区二区视频| 久碰人澡人澡人澡人澡91| 暖暖免费高清日本中文|