With the latest release of major economic indicators, including
the CPI, money supply and loans volume, in the past several days,
another interest rate hike seems imminent but experts hold
conflicting opinions.
Some people maintain that the interest rate spreads have been
narrowed by the recent two slashes in US interest rates. They
argued that if China chooses to raise its interest rates at this
time, it would certainly attract a large amount of hot money in,
thus exerting further pressure on Renminbi appreciation.
Others have suggested further utilizing the reserve requirement
ratio instead of a rate hike.
China has always insisted on being independent regarding
monetary policies. The country has seldom capitulated to foreign
pressure. Previous measures taken by the central bank indicated
that China's monetary tools are primarily aimed at solving a
domestic economic imbalance. Despite the US interest rate change,
it is still highly likely that the central bank would further raise
the interest rates.
The central bank usually announces interest rate hikes after
major economic indicators have been published, which means that the
announcement is expected in the later half of this month or even
this week.
For more details, please read the full story in Chinese (http://www.morningpost.com.cn/article.asp?articleid=136333).
(China.org.cn November 14, 2007)
