More hikes may come in May
By Zhang Fengming |
April 19, 2011, Tuesday
|
Print Edition
Print Edition
ANOTHER hike in reserve requirement ratio and one more interest rate increase are expected as early as in May as the Chinese central bank continues to withdraw liquidity from the system in its battle against inflation, economists said.
"We look for at least another reserve requirement hike during the second quarter and also expect interest rates to be raised moderately to anchor inflation expectations and correct negative real rates," Barclays Capital said in a report yesterday.
ANZ said in a report yesterday that another interest rate hike may come next month because of the worsening negative real interest rate.
China's benchmark one-year deposit rate is now at 3.25 percent, while March inflation rose to a 32-month high of 5.4 percent.
Qu Hongbin, HSBC's chief economist in China, expects one more interest rate and one more reserve requirement ratio increase in May or June in case the latest reserve requirement hike shows no signs of monetary easing.
China on Sunday ordered commercial banks to set aside more money from lending from Thursday, the fourth order this year.
The ratio for banks will rise by 0.5 percentage point. Big banks will face a 20.5 percent requirement after the move.
People's Bank of China Governor Zhou Xiaochuan said at the Boao Forum last Friday that there is not a clear (upper) limit on the required reserve ratio, while more aggressive interest rate hikes will lead to hot money inflows.
Barclays expects open market operations to play an increasingly important role as the PBOC withdraws liquidity, particularly in the second half of the year.
Meanwhile, JPMorgan said it expects two more interest rate increases this year.
Wang Tao, a UBS AG economist, said China won't ease its tightening policies because inflation may stay above 5 percent in the second quarter. She expects a combined 50-basis-point interest rate rise this year with "several" hikes in the reserve requirement.
"We look for at least another reserve requirement hike during the second quarter and also expect interest rates to be raised moderately to anchor inflation expectations and correct negative real rates," Barclays Capital said in a report yesterday.
ANZ said in a report yesterday that another interest rate hike may come next month because of the worsening negative real interest rate.
China's benchmark one-year deposit rate is now at 3.25 percent, while March inflation rose to a 32-month high of 5.4 percent.
Qu Hongbin, HSBC's chief economist in China, expects one more interest rate and one more reserve requirement ratio increase in May or June in case the latest reserve requirement hike shows no signs of monetary easing.
China on Sunday ordered commercial banks to set aside more money from lending from Thursday, the fourth order this year.
The ratio for banks will rise by 0.5 percentage point. Big banks will face a 20.5 percent requirement after the move.
People's Bank of China Governor Zhou Xiaochuan said at the Boao Forum last Friday that there is not a clear (upper) limit on the required reserve ratio, while more aggressive interest rate hikes will lead to hot money inflows.
Barclays expects open market operations to play an increasingly important role as the PBOC withdraws liquidity, particularly in the second half of the year.
Meanwhile, JPMorgan said it expects two more interest rate increases this year.
Wang Tao, a UBS AG economist, said China won't ease its tightening policies because inflation may stay above 5 percent in the second quarter. She expects a combined 50-basis-point interest rate rise this year with "several" hikes in the reserve requirement.
- About Us
- |
- Terms of Use
- |
-
RSS - |
- Privacy Policy
- |
- Contact Us
- |
- Shanghai Call Center: 962288
- |
- Tip-off hotline: 52920043
- 沪ICP证：沪ICP备05050403号-1
- |
- 互联网新闻信息服务许可证：31120180004
- |
- 网络视听许可证：0909346
- |
- 广播电视节目制作许可证：沪字第354号
- |
- 增值电信业务经营许可证：沪B2-20120012
Copyright © 1999- Shanghai Daily. All rights reserved.Preferably viewed with Internet Explorer 8 or newer browsers.
