Saturday, 21 July 2007

China raises interest rates

This was quick, if not exactly unexpected. From AFP/CNA:

China's central bank announced Friday it will raise interest rates for the third time this year in an effort to cool -- but not stop -- an economy that is growing at its fastest pace in over a decade.

Benchmark lending and deposit rates will each rise by 0.27 percentage points from Saturday, the People's Bank of China said in a statement on its website.

Some reactions from economists:

"Raising lending rates will not have much influence on high inflation, which was mainly pushed high by a very fast increase in food prices," said Huang Haizhou, a Hong Kong-based economist with Barclays Capital...

"The atmosphere in Beijing is still relatively relaxed, with no obvious belief among officials or local economists that this economy is careering out of control or growing seriously above potential," said [Standard Chartered senior economist Stephen] Green...

"We expect the boom to continue; we believe it to be sustainable," he said.

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