China's consumer price index (CPI) will see an increase of 3.1
percent in the second quarter of this year, according to a research
report released yesterday by the China Center for Economic
Research, Peking University.
Song Guoqing, a researcher for the center, said at the China
Economic Observation Forum yesterday that China did face inflation
pressures, and the People's Bank of China, the central bank, would
increase the interest rate at least once this year.
Song suggested the central bank should announce a 0.27
percentage point hike in key interest rates in the second quarter
to cool down the economy.
Inflation accelerated 3.3 percent in March, the fastest pace in
more than two years and breached the central bank's 3 percent
target for 2007. Part of the increase was attributed to rising food
prices, according to statistics from the National Bureau of
Statistics.
Major financial indexes such as newly-added loans and the M2,
the broad measure of money supply, are rising. These indexes have
been running high this month and may become major factors affecting
inflation, so the government should also pay attention to them, the
report said
Another report issued by Lehman Brothers Holdings Inc on April
20 says China’s inflation will fluctuate at three percent this year
and the central bank will increase the interest rate in second
quarter. Goldman Sachs predicated the central bank would increase
the interest rate three times in the following two quarters.
Fourteen institutions including the two aforementioned
investment banks predicted China's growth rate of the gross
domestic product (GDP) will reach 10.7 percent in the second
quarter of this year, slightly lower than its growth rate of 11.1
percent in the first quarter. But Song still insisted the
second-quarter GDP growth rate would be higher than the first
quarter.
(China Daily April 30, 2007)