New interest rate rises expected
By Feng Jianmin |
August 23, 2011, Tuesday
|
Print Edition
Print Edition
ANALYSTS are speculating there will be another interest rate rise in the next few months after China's Vice Premier Wang Qishan reiterated over the weekend that China will continue a "prudent" monetary policy.
The China Securities Journal yesterday quoted Wang as saying: "Confronted with the extremely complicated and uncertain global economic situation, the key is to do our own jobs successfully."
Wang's remarks, during a weekend visit to the northwestern Gansu Province, strengthened expectations of another round of interest rate rises after the People's Bank of China last week raised yields on its three-month, one-year and three-year bonds.
Analysts interpreted this as a signal that the central bank is continuing efforts to drain liquidity, but they suspected the bank may not act immediately because of global economic and financial uncertainties.
"The increase in yields on central bank notes intensified worries about another interest rate rise," said Guo Yanhong, a researcher with Huachuang Securities. "But increasing the rate is not suitable in the short term because of increasing turmoil in overseas markets."
The benchmark money-market rate yesterday jumped to 4.97 percent, the highest since August 1, signaling tighter liquidity.
"Shortage of money will last in the next two weeks as fewer central bank bonds mature," Huatai United Securities wrote in a note. "It is also possible the central bank is deliberately creating an expectation of more tightening measures to reduce the possibility of higher inflation."
Yang Ziqiang, head of the Jinan branch of the central bank, wrote in the official Financial News yesterday that China should introduce asymmetrical interest rate rises to tackle inflation.
"On one hand, deposit interest rates should be raised to dampen worries of further inflation," he wrote. "On the other hand, the interest rate for loans should not be changed so that banks will be forced to improve risk management against smaller margin."
The China Securities Journal yesterday quoted Wang as saying: "Confronted with the extremely complicated and uncertain global economic situation, the key is to do our own jobs successfully."
Wang's remarks, during a weekend visit to the northwestern Gansu Province, strengthened expectations of another round of interest rate rises after the People's Bank of China last week raised yields on its three-month, one-year and three-year bonds.
Analysts interpreted this as a signal that the central bank is continuing efforts to drain liquidity, but they suspected the bank may not act immediately because of global economic and financial uncertainties.
"The increase in yields on central bank notes intensified worries about another interest rate rise," said Guo Yanhong, a researcher with Huachuang Securities. "But increasing the rate is not suitable in the short term because of increasing turmoil in overseas markets."
The benchmark money-market rate yesterday jumped to 4.97 percent, the highest since August 1, signaling tighter liquidity.
"Shortage of money will last in the next two weeks as fewer central bank bonds mature," Huatai United Securities wrote in a note. "It is also possible the central bank is deliberately creating an expectation of more tightening measures to reduce the possibility of higher inflation."
Yang Ziqiang, head of the Jinan branch of the central bank, wrote in the official Financial News yesterday that China should introduce asymmetrical interest rate rises to tackle inflation.
"On one hand, deposit interest rates should be raised to dampen worries of further inflation," he wrote. "On the other hand, the interest rate for loans should not be changed so that banks will be forced to improve risk management against smaller margin."
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