Tuesday, 11 December 2007

China's inflation accelerates

The latest data out of China are pointing to a need for tighter monetary policy and, more specifically, faster appreciation of the renminbi.

Bloomberg reports China's latest inflation and trade data today.

China's inflation accelerated at the quickest pace in 11 years and the trade surplus swelled, adding pressure on the central bank to raise interest rates and let the currency appreciate faster to cool the economy.

Consumer prices rose 6.9 percent in November from a year earlier after climbing 6.5 percent in October, the statistics bureau said today. That was more than the 6.5 percent median estimate of 21 economists surveyed by Bloomberg News...

The trade surplus climbed 14.7 percent to $26.3 billion in November from a year earlier, the third-highest monthly total, the customs bureau said today. The $15.2 billion trade surplus with the U.S. pushed the 11-month total with that country to $149.2 billion.

People's Bank of China Governor Zhou Xiaochuan said today that the nation's currency policy will be used to help narrow the gap. Export growth has slowed from the 29 percent pace in the seven months through July to between 22 percent and 23 percent for each of the past four months, after cuts to tax incentives.

Yesterday, the PBC had reported that M2 money supply had risen 18.5 percent in November from a year earlier, the same rate as in October.

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