China raised interest rates for the sixth time this year

十二月 20, 2007 at 12:34 | 張貼於China, Economy, money | 發表留言

Dec. 20 (Bloomberg) — China raised interest rates for the sixth time this year to cool the world’s fastest-growing major economy after inflation accelerated at the quickest pace in 11 years.

The benchmark one-year lending rate will increase by 0.18 percentage point to a nine-year high of 7.47 percent, starting tomorrow, the People’s Bank of China said today on its Web site. The one-year deposit rate will rise by 0.27 percentage point to 4.14 percent.

Consumer prices rose 6.9 percent in November, property prices climbed at the fastest pace in two years and the main stock index has more than doubled in 2007. Higher borrowing costs and 10 increases in banks’ reserve requirements have failed to stem the gains, underscoring government concern the economy may overheat.

“Inflation expectations are rising and the central bank really needs aggressive action to cool them," said Stephen Green, senior economist at Standard Chartered Bank Plc in Shanghai. “They will get even more aggressive from now on."

It’s the third time this year that China has raised deposit rates by more than lending rates to curb asset-price gains by encouraging people to keep their money in the bank.

The central bank said higher rates were needed to curb “overheating."

House prices in 70 major cities jumped 10.5 percent in November from a year earlier. The benchmark CSI 300 Index of stocks has climbed 147 percent this year.

Inflation Surges

Inflation jumped in November on fuel and food costs. Chinese households’ concern about rising consumer prices is at the highest level since a survey began in 1999, the central bank said earlier today.


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