China Raises Benchmark Rates for First Time Since 2007
By - Oct 19, 2010 4:18 PM GMT+0100China unexpectedly raised its benchmark lending and deposit rates for the first time since 2007 ahead of data that may show inflation accelerated to the fastest pace in almost two years. Stocks and commodities fell.
The one-year lending rate will increase to 5.56 percent from 5.31 percent, effective tomorrow, the People’s Bank of China said on its website today. The deposit rate will increase to 2.5 percent from 2.25 percent.
Crude oil, stocks in Europe and U.S. index futures dropped on concern the engine of the global recovery will slow as China’s policy makers seek to curb lending and prevent a property bubble. Higher interest rates may encourage inflows of speculative capital from abroad, complicating management of the world’s fastest-growing major economy.
“The interest rate hike is beyond my expectation,” said Wang Tao, UBS AG’s Beijing-based economist. “It shows the government is increasingly worried about inflation. This is the beginning of a series of interest-rate hikes next year.’’
Inflation may have climbed to 3.6 percent in September even as growth in the world’s fastest-growing major economy slowed, according to the median forecast in a Bloomberg News survey.
Officials have in recent weeks extended curbs on property, including tougher down-payment requirements and more restrictions on home loans, in a clampdown after record price gains this year. The central bank raised the reserve requirements for six banks for a two-month period, three people with knowledge of the matter said last week.
No comments:
Post a Comment