Vice governor of the central bank Yi Gang said recently that China's interest rate is at a moderate level and will be adjusted appropriately.

Some analysts say an immediate interest rate cut is needed to maintain economic growth. As enterprise profits plummet, banks are likely to tighten credit due to the increased risk of lending. A rate cut is necessary to cut firms costs and help them obtain loans which will in turn pump liquidity into the real economy.

China's present one-year deposit rate is 3.60 percent; its one-year lending rate is 6.66 percent. The CPI this October was 4.0 percent year-on-year, 0.6 percent lower than in September.

The central bank's third quarter report said monetary policy should keep alert to the risk of deflation in the near term and guard against inflation in the long run. Generally speaking, economic growth and inflation fluctuate periodically. Monetary policy should stabilize the currency to promote economic growth.

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http://paper.cs.com.cn/html/2008-11/25/content_19822785.htm

(China.org.cn by Fan Junmei November 25, 2008)