No 'immediate' plan for rates hike (Bloomberg) Updated: 2006-06-06 10:25
China will not raise interest rates again before the release of May
economic data, Bloomberg reported on Tuesday.
Zhou Xiaochuan, governor of the People's Bank of China (PBOC), the
central bank, said the country has no "immediate" plan to raise interest
rates and will wait for May economic data before deciding.
China's central bank
governor Zhou Xiaochuan delivers a speech during the "Seminar on Financial
Infrastructure" in Beijing June 6, 2006. China will wait to observe the
impact on the economy of its late-April rise in interest rates before
deciding whether to tighten credit further Zhou said on Tuesday.
[Reuters] | "We are still monitoring the
results of the last interest- rate increase, and there won't be any further
measures immediately," Zhou was quoted as saying by the Bloomberg
report.
China's central bank said May 31 that it will step up measures to cool a
surge in lending and investment. Excessive investment in factories and real
estate is driving raw-material prices higher, leading to pressure on inflation
to accelerate, the bank said in its first-quarter monetary policy report.
Measures the central bank may use to rein in liquidity include raising the
ratio the lenders are required to put aside as deposits and more aggressive
open-market operations.
On April 28, the bank raised lending rates for the first time since October
2004, boosting the one-year benchmark rate by 0.27 of a percentage point to 5.85
percent in the government's strongest move yet to cool the economy verging on
overheating.
The Chinese economy expanded by 10.2 percent in the first quarter from a year
earlier, aided in part by hefty lending by banks. That raised fears of inflation
and that already debt-laden banks could end up saddled with more bad loans.
M2, China's broadest measure of money supply, unexpectedly grew at a faster
pace in April, rising 18.9 percent from a year earlier. New yuan loans in the
first four months of the year totaled 1.58 trillion yuan, almost two-thirds of
the central bank's target for the full year.
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