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China will raise the one-year deposit and loan interest rates by 27 basis points to 3.87 percent and 7.29 percent respectively from Sep. 15, the central bank announced on Friday. The above photo shows a scene inside a branch of Bank of China in Sanya, Hainan Province on Sept. 15, 2007. (Xinhua Photo)
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BEIJING, Sept. 14 (Xinhua) -- China will raise the
one-year deposit and loan interest rates by 27 basis points to 3.87 percent and
7.29 percent respectively from Sep. 15, the central bank announced on Friday.
This is the fifth time that China has raised the one-year benchmark interest rates this year in
a bid to curb rising inflation and tighten control over excessive liquidity.
The last interest rate hike came on Aug. 22 when the
central bank raised the one-year deposit interest rate by 27 basis points to 3.6
percent and one-year loan interest rate by 18 basis points to 7.02 percent.
The move aims to "tighten credit control, rationalize
investment and stabilize expectation of inflation", the People's Bank of China
(PBoC) said in a statement on its website.
The latest interest rate hike was anticipated
following the announcement that the consumer price index in August rose to an
11-year-high of 6.5 percent, sparking a stock market plummet of more than four
percent on Tuesday, the largest daily drop since July 5.
Central bank governor Zhou Xiaochuan said last week
that he would like to see an end to negative real interest rates, a signal of
support for more rises in borrowing costs and cooling China's sizzling stock
market.
Inflation risks pushed up by pork price hikes could
not fully explain China's frequent use of retrenching monetary measures, and the
major reason lay in the excessive money supply, said Song Guoqing, a researcher
with Peking University.
To curb excess liquidity, China raised the reserve
requirement ratio for a seventh time since this year on Sep. 6 and has issued
800 billion yuan of special treasury bonds to buy foreign exchange reserves to
finance the planned state investment firm.
China's money supply remains too much despite a
slowdown of M2 in August, said Song.
Newly released data of the central bank shows that
China's broad measure of money supply, M2, which covers cash in circulation and
all deposits, rose by 18.09 percent in August, lower than the 18.48 percent
recorded in July, but still above a high level of 18 percent.
The central bank figures also indicated that, during
the first eight months, China's new renminbi-dominated loans reached 3.08
trillion yuan, nearly last year's total, pushing up urban fixed assets
investment by 26.7 percent in the first eight months.
Bert Hofman, World Bank lead economist for China,
said more monetary tightening measures were required in the near future and
should be combined with fiscal and structural policy measures.
"It would minimize possible negative impacts to the
macro economy for the central bank to raise the benchmark interest rate step by
step, rather than a one-time sharp rise by two or three percent," said Guo
Tianyong, director of the Banking Research Center under the Central University
of Finance and Economics.
China raised the one-year deposit and loan interest
rate by 27 basis points in March, by 27 and 18 basis points respectively in May,
by 27 basis points both in July, and reduced the withholding tax on interest
income to five percent from 20 percent as of Aug. 15.
China's CPI up 6.5% in
August
BEIJING, Sept. 11 (Xinhua) -- China's consumer price index
(CPI) rose by 6.5 percent in August propelled by food price hikes, the biggest
monthly rise this year, triggering divergent opinions on China's inflationary
prospects.
Joerg Wuttke, chairman of the European Union Chamber
of Commerce in China, said China's CPI had been driven up by rising food prices
while the country's core CPI, excluding food and energy prices, was below one
percent. Full story
NDRC official: High CPI figures not a
sign of impending inflation in China
BEIJING, Aug. 20 (Xinhua) -- Rising consumer price indices
in China, do not indicate impending inflation, a senior official said on Monday.
Full Story
Pork prices in China decline for 4
consecutive weeks
BEIJING, Sept. 5 (Xinhua) -- Pork prices in China fell for
the fourth consecutive week during the week from Aug. 27 to Sept. 2 amid
government efforts to increase supply, according to the Ministry of
Commerce. Full Story
China to raise reserve requirement
ratio for 7th time this year
BEIJING, Sept. 6 (Xinhua) -- China will raise the reserve
requirement ratio by 0.5 percentage points for commercial banks to 12.5 percent
in an effort to cool the booming economy, the People's Bank of China (PBOC) said
on Thursday. Full Story
NBS: China's PPI of manufactured goods
up 2.6% in August
BEIJING, Sept. 10 (Xinhua) -- China's producer price index
(PPI) for manufactured goods was up 2.6 percent in August over the same period
of last year, the National Bureau of Statistics (NBS) said on Monday. Full Story
China to raise benchmark interest rate by 27 basis
points
BEIJING, Aug. 21 (Xinhua) -- China will raise one-year
deposit and loan interest rates by 27 basis points to 3.6 percent and
7.02percent respectively as of Aug. 22, the central bank announced on Tuesday.
This is the fourth time that China raised the
one-year benchmark interest rates this year and only one month after the last
rise on July 21. Full story
China raises interest rate, slashes
interest income tax
BEIJING, July 20 (Xinhua) -- China announced Friday it
will raise interest rates for the third time this year and slash interest tax
for bank savings, one day after the release of strong first-half economic data.
China will raise one-year benchmark deposit and
lending rates by 27 basis points to 3.33 percent and 6.84 percent respectively
from July 21, the central bank said. Full story
