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ReturnChina:CPI rise may spark rate hike
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admin
PublishDate：
2007-03-15 16:07:00
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Central bank Governor Zhou Xiaochuan's observation that China's consumer prices have grown "a bit faster" in recent months has strengthened market expectations that an interest-rate hike may be imminent.
Zhou's comment came on Tuesday on the sidelines of the annual session of the National People's Congress in Beijing, the Shanghai Securities News reported on Wednesday.
The monetary authority chief also said his agency was studying newly released February loan-growth figures, according to the newspaper.
China's consumer price index grew 2.7 percent year on year in February, up from a 2.2 percent increase in January, the National Bureau of Statistics said on Tuesday.
For January and February combined, consumer prices climbed 2.4 percent, compared with 1.4 percent for the same period last year.
The People's Bank of China has set a target of three percent for this year, twice the actual growth in 2006.
"Although last month's figure was a bit lower than the market consensus of 2.8 percent to 2.9 percent, it did accelerate from January," said Zhu Yan, a Bank of China analyst.
"If the trend continues in March, I expect more tightening such as increases in banks' reserves and interest rate hikes."
Food prices, which make up nearly a third of the nation's CPI, jumped six percent last month, contributing most to the index's uptick. Clothing prices increased 0.2 percent in February, the fastest pace in almost 10 years.
China raised borrowing costs twice last year. In February, the central bank required banks to allocate more reserves for the fifth time in eight months to mop up money available for loans.
Zhou said on Monday that China would continue to use interest rates, bank reserve requirements and bond issuances to reduce liquidity.
New loans extended by commercial banks hit 413.8 billion yuan (53.3 billion U.S. dollars) last month, up 264.7 billion yuan from the same month in 2006, the central bank said.
Acceleration in loan growth and a rebound in fixed-asset investments in the first quarter will strengthen the argument for a rate hike, Ma Jun, a Deutsche Bank economist, said in a note on Friday.
Source: Shanghai Daily
Zhou's comment came on Tuesday on the sidelines of the annual session of the National People's Congress in Beijing, the Shanghai Securities News reported on Wednesday.
The monetary authority chief also said his agency was studying newly released February loan-growth figures, according to the newspaper.
China's consumer price index grew 2.7 percent year on year in February, up from a 2.2 percent increase in January, the National Bureau of Statistics said on Tuesday.
For January and February combined, consumer prices climbed 2.4 percent, compared with 1.4 percent for the same period last year.
The People's Bank of China has set a target of three percent for this year, twice the actual growth in 2006.
"Although last month's figure was a bit lower than the market consensus of 2.8 percent to 2.9 percent, it did accelerate from January," said Zhu Yan, a Bank of China analyst.
"If the trend continues in March, I expect more tightening such as increases in banks' reserves and interest rate hikes."
Food prices, which make up nearly a third of the nation's CPI, jumped six percent last month, contributing most to the index's uptick. Clothing prices increased 0.2 percent in February, the fastest pace in almost 10 years.
China raised borrowing costs twice last year. In February, the central bank required banks to allocate more reserves for the fifth time in eight months to mop up money available for loans.
Zhou said on Monday that China would continue to use interest rates, bank reserve requirements and bond issuances to reduce liquidity.
New loans extended by commercial banks hit 413.8 billion yuan (53.3 billion U.S. dollars) last month, up 264.7 billion yuan from the same month in 2006, the central bank said.
Acceleration in loan growth and a rebound in fixed-asset investments in the first quarter will strengthen the argument for a rate hike, Ma Jun, a Deutsche Bank economist, said in a note on Friday.
Source: Shanghai Daily
