With the latest release of major economic indicators, including the CPI, money supply and loans volume, in the past several days, another interest rate hike seems imminent but experts hold conflicting opinions.
Some people maintain that the interest rate spreads have been narrowed by the recent two slashes in US interest rates. They argued that if China chooses to raise its interest rates at this time, it would certainly attract a large amount of hot money in, thus exerting further pressure on Renminbi appreciation.
Others have suggested further utilizing the reserve requirement ratio instead of a rate hike.
China has always insisted on being independent regarding monetary policies. The country has seldom capitulated to foreign pressure. Previous measures taken by the central bank indicated that China's monetary tools are primarily aimed at solving a domestic economic imbalance. Despite the US interest rate change, it is still highly likely that the central bank would further raise the interest rates.
The central bank usually announces interest rate hikes after major economic indicators have been published, which means that the announcement is expected in the later half of this month or even this week.
For more details, please read the full story in Chinese (http://www.morningpost.com.cn/article.asp?articleid=136333).
(China.org.cn November 14, 2007)
