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��Home>>Business
China might raise interest rates
www.chinanews.cn 2007-06-12 16:36:56
Chinanews, Guangzhou, June 12 �C Li Junjie, an economist at the State
Development and Reform Commission's Macroeconomy Research Institute,
recently wrote an article in the Information Times. The article says that
due to liquidity problem, capital market expanded quickly, and in order
to curb the fast rise of assets prices, the central government should
raise the interest rates.
In fact, many institutions predict that the central bank may raise the
interest rates shortly. If the interest rates are raised, it may curb the
rising of the stock index. However, the measure may bring more negative
consequences to the real estate market, some experts say.
On June 5, Chinese central bank governor Zhou Xiaochuan said that the
central bank had paid close attention to the CPI figures in May, which
would be released soon. Based on the figures, the central bank will
decide whether or not to raise the interest rates, he said.
Many insiders said that it was very likely for the central bank to raise
the interest rates. Chief economist of Credit Suisse First Boston Tao
Dong even gave very specific information on such raise. According to Tao,
the central bank should raise the interest rate for loans three times in
the second half of this year and the rate should be raised by a total of
81 base points, making the one-year loan rate reach 7.38 percent. In
addition, the one-year deposit rate should also be raised to reach 4.14
percent by this end of the year so that the actual interest (interest
after the interest gains tax is deducted) will remain positive.
Judging from the current status, it is very probable for the May CPI
figures to rise more than expected. In light of this, it is almost
certain that the central bank will raise the interest rates for the sixth
time in recent years, said Han Shitong, a real estate analyst in
Guangzhou.
The central government wants to curb the rise of assets prices by
possible raise in interest rates. The idea may not be wrong. However, it
should be noted that if the interest rates are raised, it may lead to
negative consequences to the real estate market, some experts said.
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