Yi Gang, assistant to the governor of the People's Bank of
China, suggested the central bank still needs time to decide
whether to raise the benchmark interest rate again this year,
according to the Shanghai Securities News.
September's consumer price index (CPI) growth was a reported 6.2
percent, down 0.3 percentage points from the peak of August's 6.5
percent. However, Chen Jijun, a macro economic analyzer from CITIC
Securities, said "the actual interest yield is still negative based
on current one year benchmark interest rate of 3.87 percent."
On October 11, the central bank unleashed 150 billion yuan
(US$20 billion) of central bank notes with 3-year maturity period.
Two days later, it announced the year's eighth lift in banks'
reserve requirement ratio, which together with gloomy fixed asset
investment figures, raised market expectations for a sixth interest
rate rise this year.
In the meantime, Yi, when addressing a forum in Hong Kong,
claimed the whole year's CPI will surpass 4 percent and reach a
likely 4.5 percent. Yet because turning the negative actual
interest yield is no short term effort, the central bank has
maintained its "wait and see" policy.
With regard to renminbi appreciation, Yi personally believed
minor fluctuation and gentle appreciation are appropriate
approaches.
(China Daily October 25, 2007)
