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Banks expect China to raise interest rate once or twice

www.chinanews.cn 2007-07-18 17:33:07

Chinanews, Beijing, July 18 �C The central bank might raise the interest
rate another one or two times this year. The most recent interest rate
raise might come probably at the end of this month, according to the
monthly reviews issued by many banks in China, the Shanghai Securities
Journal reported.
Meanwhile, insiders say the possibility should not be excluded for China
to issue special treasury bonds and to reduce or cancel the interest
gains tax. Compared with interest rate raise, China might prefer issuing
the special treasury bonds.
According to the China Merchants Bank Monthly Review, liquidity problem
still exists and CPI figures might touch the alerting line in July.
Considering these factors, it is very likely for the central bank to
further raise the interest rate once or twice more this year. The most
recent interest rate raise might come by the end of this month.
At present, the central bank is weakening its efforts of reabsorbing
currency from circulation. This might indicate that it wants to leave
more room for other tightened monetary policies, including issuing
special treasury bonds and raising interest rate, the report said.
China might very likely raise the interest rate once or twice during the
second half of the year. The earliest interest rate raise might occur in
July. Meanwhile, some other measures, such as reducing or cancelling the
interest gains tax, might also be taken at the time when the interest
rate is raised, said a monthly report issued by the Bank of China.

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